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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2019or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________ to ________

Commission file number: 1-5256

V. F. CORPORATION(Exact name of registrant as specified in its charter)

Pennsylvania 23-1180120(State or other jurisdiction of incorporation or organization) (I.R.S. employer identification number)

8505 E. Orchard RoadGreenwood Village, Colorado 80111

(Address of principal executive offices)

(720) 778-4000(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:(Title of each class) (Trading Symbol(s)) (Name of each exchange on which registered)

Common Stock, without par value, stated capital, $0.25 pershare VFC New York Stock Exchange

0.625% Senior Notes due 2023 VFC23 New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

On October 26, 2019, there were 399,373,631 shares of the registrant’s common stock outstanding.

VF CORPORATIONTable of Contents

PageNo.

Part I — Financial Information

Item 1 — Financial Statements (Unaudited) 3

Consolidated Balance Sheets: September 2019, March 2019 and September 2018 3

Consolidated Statements of Income: Three and six months ended September 2019 and September 2018 4

Consolidated Statements of Comprehensive Income: Three and six months ended September 2019 and September 2018 5

Consolidated Statements of Cash Flows: Six months ended September 2019 and September 2018 6

Consolidated Statements of Stockholders’ Equity: Three and six months ended September 2019 and September 2018 8

Notes to Consolidated Financial Statements 10

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations 33

Item 3 — Quantitative and Qualitative Disclosures about Market Risk 43

Item 4 — Controls and Procedures 43 Part II — Other Information

Item 1 — Legal Proceedings 44

Item 1A — Risk Factors 44

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds 44

Item 6 — Exhibits 45 Signatures 46

PART I — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED).VF CORPORATION

Consolidated Balance Sheets(Unaudited)

(In thousands, except share amounts) September 2019 March 2019 September 2018ASSETS Current assets

Cash and equivalents $ 507,605 $ 445,119 $ 266,788Accounts receivable, less allowance for doubtful accounts of: September 2019 ‑ $20,742;

March 2019 - $19,638; September 2018 - $19,743 1,976,154 1,465,855 1,961,274Inventories 1,890,716 1,432,660 1,723,057Other current assets 400,732 433,793 422,287Current assets held-for-sale — — 159,852Current assets of discontinued operations — 896,030 884,696

Total current assets 4,775,207 4,673,457 5,417,954Property, plant and equipment, net 871,601 915,177 893,811Intangible assets, net 1,919,770 1,972,364 2,029,901Goodwill 1,529,385 1,541,314 1,543,143Operating lease right-of-use assets 1,263,903 — —Other assets 910,489 772,755 763,762Other assets of discontinued operations — 481,718 481,854

TOTAL ASSETS $ 11,270,355 $ 10,356,785 $ 11,130,425LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities

Short-term borrowings $ 484,321 $ 659,060 $ 1,564,899Current portion of long-term debt 4,986 5,263 5,885Accounts payable 550,700 580,867 603,575Accrued liabilities 1,364,331 1,154,932 1,064,555Current liabilities held-for-sale — — 11,358Current liabilities of discontinued operations — 261,482 258,424

Total current liabilities 2,404,338 2,661,604 3,508,696Long-term debt 2,090,922 2,115,884 2,150,595Operating lease liabilities 1,028,363 — —Other liabilities 1,099,113 1,232,200 1,246,962Other liabilities of discontinued operations — 48,581 44,616Commitments and contingencies

Total liabilities 6,622,736 6,058,269 6,950,869Stockholders’ equity

Preferred Stock, par value $1; shares authorized, 25,000,000; no shares outstanding atSeptember 2019, March 2019 or September 2018 — — —

Common Stock, stated value $0.25; shares authorized, 1,200,000,000; sharesoutstanding at September 2019 – 398,865,790; March 2019 – 396,824,662; September2018 – 397,161,808 99,716 99,206 99,290

Additional paid-in capital 4,072,640 3,921,784 3,795,395Accumulated other comprehensive income (loss) (930,725 ) (902,075 ) (862,916 )Retained earnings 1,405,988 1,179,601 1,147,787

Total stockholders’ equity 4,647,619 4,298,516 4,179,556TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,270,355 $ 10,356,785 $ 11,130,425

See notes to consolidated financial statements.

3 VF Corporation Q2 FY20 Form 10-Q

VF CORPORATION

Consolidated Statements of Income(Unaudited)

Three Months Ended September Six Months Ended September (In thousands, except per share amounts) 2019 2018 2019 2018Net revenues $ 3,393,268 $ 3,219,390 $ 5,664,747 $ 5,356,525Costs and operating expenses

Cost of goods sold 1,597,307 1,545,391 2,633,421 2,550,680Selling, general and administrative expenses 1,216,896 1,129,013 2,318,969 2,147,760

Total costs and operating expenses 2,814,203 2,674,404 4,952,390 4,698,440Operating income 579,065 544,986 712,357 658,085Interest income 4,983 1,484 12,112 3,630Interest expense (20,810 ) (28,305 ) (42,937 ) (55,304 )Other income (expense), net (1,813 ) (31,970 ) 3,785 (51,395 )Income from continuing operations before income taxes 561,425 486,195 685,317 555,016Income tax expense (benefit) (87,576 ) 70,071 (60,933 ) 77,528Income from continuing operations 649,001 416,124 746,250 477,488Income (loss) from discontinued operations, net of tax — 90,997 (48,028 ) 189,991Net income $ 649,001 $ 507,121 $ 698,222 $ 667,479Earnings (loss) per common share - basic

Continuing operations $ 1.63 $ 1.05 $ 1.88 $ 1.21Discontinued operations — 0.23 (0.12 ) 0.48

Total earnings per common share - basic $ 1.63 $ 1.28 $ 1.76 $ 1.69Earnings (loss) per common share - diluted

Continuing operations $ 1.61 $ 1.04 $ 1.86 $ 1.19Discontinued operations — 0.23 (0.12 ) 0.47

Total earnings per common share - diluted $ 1.61 $ 1.26 $ 1.74 $ 1.67Weighted average shares outstanding

Basic 397,751 395,892 397,239 395,029Diluted 402,261 401,939 402,088 400,744


VF Corporation Q2 FY20 Form 10-Q 4

VF CORPORATION

Consolidated Statements of Comprehensive Income(Unaudited)

Three Months Ended September Six Months Ended September (In thousands) 2019 2018 2019 2018Net income $ 649,001 $ 507,121 $ 698,222 $ 667,479Other comprehensive income (loss)

Foreign currency translation and other Losses arising during the period (70,473 ) (12,600 ) (57,644 ) (173,758 )

Income tax effect (8,912 ) (1,623 ) (5,969 ) (15,335 )Defined benefit pension plans

Current period actuarial gains (losses) (14,610 ) (1,898 ) (14,610 ) 52,042Amortization of net deferred actuarial losses 4,014 6,655 8,033 15,477Amortization of deferred prior service costs (credits) 12 (59 ) 25 610Reclassification of net actuarial loss from settlement charge 519 1,342 519 8,184Reclassification of deferred prior service cost due tocurtailments — — — 9,483

Income tax effect 2,207 (1,562 ) 499 (22,217 )Derivative financial instruments

Gains arising during the period 51,396 15,240 66,170 109,869Income tax effect (7,048 ) (89 ) (10,922 ) (11,447 )

Reclassification to net income for (gains) losses realized (23,688 ) 13,846 (34,183 ) 30,163Income tax effect 3,244 (90 ) 6,000 (1,957 )

Other comprehensive income (loss) (63,339 ) 19,162 (42,082 ) 1,114Comprehensive income $ 585,662 $ 526,283 $ 656,140 $ 668,593



VF CORPORATIONConsolidated Statements of Cash Flows

(Unaudited)

Six Months Ended September (In thousands) 2019 2018OPERATING ACTIVITIES

Net income $ 698,222 $ 667,479Income (loss) from discontinued operations, net of tax (48,028 ) 189,991Income from continuing operations, net of tax 746,250 477,488Adjustments to reconcile net income to cash used by operating activities:

Depreciation and amortization, including operating lease right-of-use assets 321,129 129,259Stock-based compensation 71,419 46,669Provision for doubtful accounts 6,234 6,714Pension expense in excess of (less than) contributions (6,125 ) 1,595Loss on sale of businesses, net of tax — 29,791Other, net (99,762 ) 21,604Changes in operating assets and liabilities:

Accounts receivable (544,133 ) (806,080 )Inventories (474,417 ) (384,093 )Accounts payable (23,959 ) 124,101Income taxes (47,082 ) (91,183 )Accrued liabilities (125,950 ) 333,511Operating lease right-of-use assets and liabilities (227,609 ) —Other assets and liabilities 25,314 14,939

Cash used by operating activities - continuing operations (378,691 ) (95,685 )Cash provided by operating activities - discontinued operations 13,213 198,636

Cash provided (used) by operating activities (365,478 ) 102,951INVESTING ACTIVITIES

Business acquisitions, net of cash received — (320,405 )Proceeds from sale of businesses, net of cash sold — 288,273Capital expenditures (108,596 ) (129,582 )Software purchases (25,576 ) (32,710 )Other, net 59,087 (9,979 )

Cash used by investing activities - continuing operations (75,085 ) (204,403 )Cash used by investing activities - discontinued operations (2,327 ) (13,924 )

Cash used by investing activities (77,412 ) (218,327 )FINANCING ACTIVITIES

Net increase (decrease) in short-term borrowings (168,421 ) 40,219Payments on long-term debt (2,868 ) (3,107 )Purchases of treasury stock — (480 )Cash dividends paid (373,604 ) (363,851 )Cash received from Kontoor Brands, net of cash transferred of $126.8 million 906,148 —Proceeds from issuance of Common Stock, net of shares withheld for taxes 50,659 130,114

Cash provided (used) by financing activities 411,914 (197,105 )Effect of foreign currency rate changes on cash, cash equivalents and restricted cash (5,385 ) (17,270 )Net change in cash, cash equivalents and restricted cash (36,361 ) (329,751 )Cash, cash equivalents and restricted cash – beginning of year 556,587 689,190Cash, cash equivalents and restricted cash – end of period $ 520,226 $ 359,439

Continued on next page.See notes to consolidated financial statements.


VF CORPORATIONConsolidated Statements of Cash Flows

(Unaudited)

Six Months Ended September (In thousands) 2019 2018Balances per Consolidated Balance Sheets:

Cash and cash equivalents $ 507,605 $ 266,788Other current assets 2,748 3,919Current assets held-for-sale — 2,059Current and other assets of discontinued operations — 86,009Other assets 9,873 664

Total cash, cash equivalents and restricted cash $ 520,226 $ 359,439



VF CORPORATION

Consolidated Statements of Stockholders’ Equity(Unaudited)

Three Months Ended September 2019

Additional Paid-in Capital

Accumulated Other

ComprehensiveIncome (Loss)

RetainedEarnings

Common Stock (In thousands, except share amounts) Shares Amounts Total Balance, June 2019 397,922,120 $ 99,481 $ 3,988,385 $ (867,386) $ 931,134 $ 4,151,614

Net income — — — — 649,001 649,001 Dividends on Common Stock ($0.43 per

share) — — — — (171,066) (171,066) Stock-based compensation, net 943,670 235 84,255 — (3,081) 81,409 Foreign currency translation and other — — — (79,385 ) — (79,385) Defined benefit pension plans — — — (7,858 ) — (7,858) Derivative financial instruments — — — 23,904 — 23,904

Balance, September 2019 398,865,790 $ 99,716 $ 4,072,640 $ (930,725) $ 1,405,988 $ 4,647,619



Accumulated Other


RetainedEarnings

Common Stock (In thousands, except share amounts) Shares Amounts Total Balance, June 2018 395,509,138 $ 98,877 $ 3,688,529 $ (882,078) $ 825,788 $ 3,731,116


share) — — — — (182,334) (182,334) Purchase of treasury stock (5,210) (1) — — (479) (480) Stock-based compensation, net 1,657,880 414 106,866 — (2,309) 104,971 Foreign currency translation and other — — — (14,223 ) — (14,223) Defined benefit pension plans — — — 4,478 — 4,478 Derivative financial instruments — — — 28,907 — 28,907


Continued on next page.



VF CORPORATION

Consolidated Statements of Stockholders’ Equity(Unaudited)

Six Months Ended September 2019


Accumulated Other


RetainedEarnings

Common Stock

(In thousands, except share amounts) Shares Amounts Total Balance, March 2019 396,824,662 $ 99,206 $ 3,921,784 $ (902,075) $ 1,179,601 $ 4,298,516

Adoption of new accounting standard, ASU2016-02 — — — — (2,491) (2,491)

Adoption of new accounting standard, ASU2018-02 — — — (61,861 ) 61,861 —


share) — — — — (373,604) (373,604) Stock-based compensation, net 2,041,128 510 150,856 — (27,393) 123,973 Foreign currency translation and other — — — (63,613 ) — (63,613) Defined benefit pension plans — — — (5,534 ) — (5,534) Derivative financial instruments — — — 27,065 — 27,065 Spin-off of Jeans Business — — — 75,293 (130,208) (54,915)




Accumulated Other


RetainedEarnings

Common Stock (In thousands, except share amounts) Shares Amounts Total Balance, March 2018 394,313,070 $ 98,578 $ 3,607,424 $ (864,030) $ 846,124 $ 3,688,096

Adoption of new accounting standard, ASU2014-09 — — — — 1,956 1,956


share) — — — — (363,851) (363,851) Purchase of treasury stock (5,210) (1) — — (479) (480) Stock-based compensation, net 2,853,948 713 187,971 — (3,442) 185,242 Foreign currency translation and other — — — (189,093 ) — (189,093) Defined benefit pension plans — — — 63,579 — 63,579 Derivative financial instruments — — — 126,628 — 126,628




VF CORPORATION

Notes to Consolidated Financial Statements(Unaudited)

NOTE 1 — BASIS OF PRESENTATIONVF Corporation (together with its subsidiaries, collectively known as “VF” or the“Company”) uses a 52/53 week fiscal year ending on the Saturday closest toMarch 31 of each year. The Company's current fiscal year runs from March 31,2019 through March 28, 2020 ("Fiscal 2020"). Accordingly, this Form 10-Q presentsour second quarter of Fiscal 2020. For presentation purposes herein, all referencesto periods ended September 2019 and September 2018 relate to the fiscal periodsended on September 28, 2019 and September 29, 2018, respectively. Referencesto March 2019 relate to information as of March 30, 2019.

On May 22, 2019, VF completed the spin-off of its Jeans business, which includedthe Wrangler®, Lee® and Rock & Republic® brands, as well as the VF OutletTMbusiness, into an independent, publicly traded company. As a result, VF reportedthe operating results for the Jeans business in the income (loss) from discontinuedoperations, net of tax line item in the Consolidated Statements of Income and therelated cash flows have been reported as discontinued operations in theConsolidated Statements of Cash Flows, for all periods presented. In addition, therelated assets and liabilities have been reported as assets and liabilities ofdiscontinued operations in the Consolidated Balance Sheets, through the date thespin-off was completed.

Additionally, the Nautica® brand business has been reported as discontinuedoperations in our Consolidated Statements of Income and Consolidated Statementsof Cash Flows, and the related held-for-sale assets and liabilities have beenpresented as assets and liabilities of discontinued operations in the ConsolidatedBalance Sheets, through the April 30, 2018 date of sale. These changes have beenapplied to all periods presented.

Unless otherwise noted, discussion within these notes to the consolidated financialstatements relates to continuing operations. Refer to Note 5 for additionalinformation on discontinued operations.

During the three months ended September 2018, the Company reached thedecision to sell its Reef® brand and Van Moer businesses. The Companydetermined that the associated assets and liabilities met the held-for-saleaccounting criteria and they were classified accordingly in the September 2018Consolidated Balance Sheet. Refer to Note 5 for additional information ondivestitures.

Certain prior year amounts have been reclassified to conform to the Fiscal 2020presentation.

The accompanying unaudited condensed consolidated financial statements havebeen prepared in accordance with the instructions to Form 10-Q and Rule 10-01 ofRegulation S-X and do not include all of the information and notes required bygenerally accepted accounting principles in the United States of America (“GAAP”)for complete financial statements. Similarly, the March 2019 condensedconsolidated balance sheet was derived from audited financial statements but doesnot include all disclosures required by GAAP. In the opinion of management, theaccompanying unaudited condensed consolidated financial statements contain allnormal and recurring adjustments necessary to fairly state the consolidatedfinancial position, results of operations and cash flows of VF for the interim periodspresented. Operating results for the three and six months ended September 2019are not necessarily indicative of results that may be expected for any other interimperiod or for Fiscal 2020. For further information, refer to the consolidated financialstatements and notes included in VF’s Annual Report on Form 10-K for the yearended March 30, 2019 (“Fiscal 2019 Form 10-K”).

NOTE 2 — RECENTLY ADOPTED AND ISSUED ACCOUNTING STANDARDSRecently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board ("FASB") issuedAccounting Standards Update ("ASU") No. 2016-02, “Leases (Topic 842)”, a newaccounting standard on leasing. The FASB subsequently issued updates to thestandard to provide additional clarification on specific topics, including permittedtransition methods. Collectively, the guidance is referred to as FASB AccountingStandards Codification ("ASC") 842. This standard requires companies to recordmost leased assets and liabilities on the balance sheet, and also retains a dualmodel approach for assessing lease classification and recognizing expense. TheCompany adopted this standard on March 31, 2019, utilizing the modifiedretrospective method and has recognized the cumulative effect of initially applyingthe new standard in retained earnings. The effective date of the adoption has beenused as the date of initial application, and thus comparative prior period financialinformation has not been restated and continues to be reported under accountingstandards in effect for those periods.

The standard provides certain optional practical expedients for transition. TheCompany elected the transition relief package of practical expedients by applyingprevious accounting conclusions under ASC Topic 840, Leases ("ASC 840"), to allleases that existed prior to the transition date. As a result, VF did not reassess (i)whether existing or expired contracts contain leases, (ii) lease classification for anyexisting or expired leases, or (iii) whether lease origination costs qualified as initialdirect costs. The Company also elected the land easement practical expedient,which allows the Company to apply ASC 842 prospectively to land easements afterthe adoption date if they were not previously accounted for under ASC 840. Certainleases contain both lease and non-lease components. For leases associated withspecific asset classes, including certain real estate, vehicles, manufacturingmachinery and IT equipment, VF has elected the practical expedient which permitsentities to account for separate lease and non-lease components as a singlecomponent. For all other lease contracts, the Company has elected to account foreach


lease component separately from the non-lease components of the contract. Whenapplicable, VF will measure the consideration to be paid pursuant to the agreementand allocate this consideration to the lease and non-lease components based onrelative stand-alone prices. Further, the Company made an accounting policyelection to not recognize right-of-use assets and lease liabilities for leases withterms of 12 months or less.

The adoption of ASC 842 resulted in a net decrease of $2.5 million in the retainedearnings line item of the Consolidated Balance Sheet as of March 31, 2019. Theadoption of ASC 842 also resulted in the recognition of operating lease right-of-useassets and operating lease liabilities within the Consolidated Balance Sheet. Referto Note 10 for additional lease disclosures.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging(Topic 815): Targeted Improvements to Accounting for Hedging Activities" , anupdate that amends and simplifies certain aspects of hedge accounting rules tobetter portray the economic results of risk management activities in the financialstatements. The FASB subsequently issued updates to the standard to provideadditional guidance on specific topics. This guidance became effective for VF in thefirst quarter of Fiscal 2020, but did not impact VF's consolidated financialstatements.

In February 2018, the FASB issued ASU No. 2018-02, "Income Statement-Reporting Comprehensive Income (Topic 220) : Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income", an update thataddresses the effect of the change in the U.S. federal corporate income tax ratedue to the enactment of the Tax Cuts and Jobs Act ("U.S. Tax Act") on items withinaccumulated other comprehensive income (loss). The guidance became effectivefor VF in the first quarter of Fiscal 2020. The Company elected to reclassify theincome tax effects of the U.S. Tax Act on items within accumulated othercomprehensive income (loss) of $61.9 million to retained earnings, which primarilyrelated to deferred taxes previously recorded for pension benefits. The adoption ofthis guidance did not have an impact on VF's consolidated results of operations orcash flows.

In June 2018, the FASB issued ASU No. 2018-07, "Compensation—StockCompensation (Topic 718): Improvements to Nonemployee Share-Based PaymentAccounting", an update that expands the scope of Topic 718 to include share-basedpayment transactions for acquiring goods and services from nonemployees. Thisguidance became effective for VF in the first quarter of Fiscal 2020, but did notimpact VF's consolidated financial statements.

In July 2018, the FASB issued ASU No. 2018-09, "Codification Improvements", anupdate that provides technical corrections, clarifications and other improvementsacross a variety of accounting topics. The transition and effective date guidance isbased on the facts and circumstances of each update; however, many of thembecame effective for VF in the first quarter of Fiscal 2020. The guidance did notimpact VF's consolidated financial statements.

Recently Issued Accounting StandardsIn June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments—CreditLosses (Topic 326): Measurement of Credit Losses on Financial Instruments",which requires entities to use a forward-looking approach based on expected lossesto estimate credit losses on certain types of financial instruments, including tradereceivables. The FASB has subsequently issued updates to the standard to provideadditional clarification on specific topics. This guidance will be effective for VF in thefirst quarter of the year ending April 3, 2021 ("Fiscal 2021") with early adoptionpermitted. The Company is evaluating the impact that adopting this guidance willhave on VF’s consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement(Topic 820): Disclosure Framework—Changes to the Disclosure Requirements forFair Value Measurement", an update that modifies the disclosure requirements forfair value measurements by removing, modifying or adding certain disclosures. Theguidance will be effective for VF in the first quarter of Fiscal 2021 with earlyadoption permitted. The Company is evaluating the impact that adopting thisguidance will have on VF's disclosures.

In August 2018, the FASB issued ASU No. 2018-14, "Compensation— RetirementBenefits—Defined Benefit Plans—General (Subtopic 715-20): DisclosureFramework—Changes to the Disclosure Requirements for Defined Benefit Plans",an update that modifies the disclosure requirements for employers who sponsordefined benefit pension or other postretirement plans. The guidance will be effectivefor VF in Fiscal 2021 with early adoption permitted. The Company is evaluating theimpact that adopting this guidance will have on VF's disclosures.

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill andOther—Internal-Use Software (Subtopic 350-40): Customer’s Accounting forImplementation Costs Incurred in a Cloud Computing Arrangement That Is aService Contract", an update that aligns the requirements for capitalizingimplementation costs incurred in a hosting arrangement that is a service contractwith the requirements for capitalizing implementation costs incurred to develop orobtain internal-use software. The guidance will be effective for VF in the first quarterof Fiscal 2021 with early adoption permitted. The Company is evaluating the impactthat adopting this guidance will have on VF's consolidated financial statements.


NOTE 3 — REVENUESThe following table provides information about accounts receivable, contract assets and contract liabilities:

(In thousands) September 2019 March 2019 September 2018Accounts receivable, net $ 1,976,154 $ 1,465,855 $ 1,961,274Contract assets (a) 2,433 2,569 999Contract liabilities (b) 41,228 30,181 29,559(a) Included in the other current assets line item in the Consolidated Balance

Sheets.(b) Included in the accrued liabilities and other liabilities line items in the Consolidated Balance

Sheets.

For the three and six months ended September 2019, the Company recognized$20.3 million and $45.0 million, respectively, of revenue that was included in thecontract liability balance during the periods. The change in the contract asset andcontract liability balances primarily results from the timing differences between theCompany's satisfaction of performance obligations and the customer's payment.

For the three and six months ended September 2019, revenue recognized fromperformance obligations satisfied, or partially satisfied, in prior periods was notmaterial.

As of September 2019, the Company expects to recognize $60.7 million of fixedconsideration related to the future minimum guarantees in effect under its licensingagreements and expects

such amounts to be recognized over time through December 2024. The variableconsideration related to licensing arrangements is not disclosed as a remainingperformance obligation as it qualifies for the sales-based royalty exemption. VF hasalso elected the practical expedient to not disclose the transaction price allocated toremaining performance obligations for contracts with an original expected durationof one year or less.

As of September 2019, there were no arrangements with transaction price allocatedto remaining performance obligations other than contracts for which the Companyhas applied the practical expedients and the fixed consideration related to futureminimum guarantees discussed above.

Disaggregation of RevenueThe following tables disaggregate our revenues by channel and geography, which provides a meaningful depiction of how the nature, timing and uncertainty of revenues areaffected by economic factors. The wholesale channel includes fees generated from sourcing activities as the customers and point-in-time revenue recognition are similar toother wholesale arrangements.

Three Months Ended September 2019 (In thousands) Outdoor Active Work Other Total Channel revenues Wholesale $ 1,175,422 $ 709,770 $ 392,906 $ 15,172 $ 2,293,270 Direct-to-consumer 347,684 697,627 37,115 2,898 1,085,324 Royalty 2,831 6,237 5,606 — 14,674

Total $ 1,525,937 $ 1,413,634 $ 435,627 $ 18,070 $ 3,393,268

Geographic revenues United States $ 737,255 $ 711,541 $ 345,548 $ — $ 1,794,344 International 788,682 702,093 90,079 18,070 1,598,924

Total $ 1,525,937 $ 1,413,634 $ 435,627 $ 18,070 $ 3,393,268



(In thousands) Outdoor Active Work Other TotalChannel revenues Wholesale $ 1,130,716 $ 684,028 $ 413,453 $ 1,265 $ 2,229,462Direct-to-consumer 332,548 610,672 33,357 — 976,577Royalty 3,239 5,261 4,851 — 13,351

Total $ 1,466,503 $ 1,299,961 $ 451,661 $ 1,265 $ 3,219,390

Geographic revenues United States $ 674,076 $ 652,494 $ 355,438 $ 1,265 $ 1,683,273International 792,427 647,467 96,223 — 1,536,117

Total $ 1,466,503 $ 1,299,961 $ 451,661 $ 1,265 $ 3,219,390

Six Months Ended September 2019 (In thousands) Outdoor Active Work Other Total Channel revenues Wholesale $ 1,517,178 $ 1,369,912 $ 770,454 $ 17,980 $ 3,675,524 Direct-to-consumer 614,026 1,263,514 77,967 6,352 1,961,859 Royalty 5,353 12,334 9,677 — 27,364

Total $ 2,136,557 $ 2,645,760 $ 858,098 $ 24,332 $ 5,664,747

Geographic revenues United States $ 1,040,307 $ 1,422,746 $ 691,708 $ — $ 3,154,761 International 1,096,250 1,223,014 166,390 24,332 2,509,986

Total $ 2,136,557 $ 2,645,760 $ 858,098 $ 24,332 $ 5,664,747


(In thousands) Outdoor Active Work Other TotalChannel revenues Wholesale $ 1,440,492 $ 1,338,876 $ 794,817 $ 9,570 $ 3,583,755Direct-to-consumer 588,512 1,086,208 70,195 — 1,744,915Royalty 6,099 11,814 9,942 — 27,855

Total $ 2,035,103 $ 2,436,898 $ 874,954 $ 9,570 $ 5,356,525

Geographic revenues United States $ 936,932 $ 1,296,599 $ 686,537 $ 9,570 $ 2,929,638International 1,098,171 1,140,299 188,417 — 2,426,887

Total $ 2,035,103 $ 2,436,898 $ 874,954 $ 9,570 $ 5,356,525


NOTE 4 — ACQUISITIONSIcebreaker

On April 3, 2018, VF acquired 100% of the stock of Icebreaker Holdings Limited("Icebreaker") for NZ$274.4 million ($198.5 million) in cash, subject to workingcapital and other adjustments. The purchase price was primarily funded with short-term borrowings. The purchase price decreased NZ$1.4 million ($0.9 million) for theyear ended March 2019, related to working capital adjustments, resulting in arevised purchase price of NZ$273.0 million ($197.6 million). The purchase priceallocation was finalized during the three months ended March 2019.

Icebreaker was a privately held company based in Auckland, New Zealand.Icebreaker®, the primary brand, specializes in high-performance apparel based onnatural fibers, including Merino wool, plant-based fibers and recycled fibers. It is anideal complement to VF's Smartwool® brand, which also features Merino wool in itsclothing and accessories. Together, the Smartwool® and Icebreaker® brandsposition VF as a global leader in the Merino wool and natural fiber categories.

The following table summarizes the estimated fair values of the Icebreaker assets acquired and liabilities assumed at the date of acquisition:

(In thousands) April 3, 2018Cash and equivalents $ 6,444Accounts receivable 16,781Inventories 31,728Other current assets 3,931Property, plant and equipment 3,858Intangible assets 98,041Other assets 4,758Total assets acquired 165,541

Short-term borrowings 7,235Accounts payable 2,075Other current liabilities 21,262Deferred income tax liabilities 26,870Other noncurrent liabilities 433Total liabilities assumed 57,875

Net assets acquired 107,666Goodwill 89,943Purchase price $ 197,609

The goodwill is attributable to the acquired workforce of Icebreaker and thesignificant synergies expected to arise as a result of the acquisition. All of thegoodwill has been assigned to the Outdoor segment and none is expected to bedeductible for tax purposes.

The Icebreaker® trademark, which management determined to have an indefinitelife, has been valued at $70.1 million. Amortizable intangible assets have beenassigned values of $27.8 million for customer relationships and $0.2 million fordistribution agreements. Customer relationships are being amortized using anaccelerated method over 11.5 years. Distribution agreements are being amortizedon a straight-line basis over four years.

Total transaction expenses for the Icebreaker acquisition of $7.4 million wererecognized in the selling, general and administrative expenses line item in theConsolidated Statements of Income, of which $4.1 million was recognized duringthe six months ended September 2018 and the remainder was recognized prior toFiscal 2019. In addition, the Company recognized a $9.9 million gain on derivativesused to hedge the purchase price of Icebreaker in the other income (expense), netline item in the Consolidated Statements of Income, of which $0.3 million wasrecognized during the six months ended September 2018 and the remainder wasrecognized prior to Fiscal 2019.

Pro forma results of operations of the Company would not be materially different asa result of the Icebreaker acquisition and therefore are not presented.


Altra

On June 1, 2018, VF acquired 100% of the stock of Icon-Altra LLC, plus certainassets in Europe ("Altra"). The purchase price was $131.7 million in cash, subject toworking capital and other adjustments and was primarily funded with short-termborrowings. The purchase price decreased $0.1 million during the year endedMarch 2019, related to working capital adjustments, resulting in a revised purchaseprice of $131.6 million. The allocation of the purchase price was finalized during thethree months ended December 2018, resulting in a decrease of goodwill

by $1.5 million related to a final adjustment to working capital balances.

Altra®, the primary brand, is an athletic and performance-based lifestyle footwearbrand. Altra provides VF with a unique and differentiated technical footwear brandand a capability that, when applied across VF's footwear platforms, will serve as acatalyst for growth.

The following table summarizes the estimated fair values of the Altra assets acquired and liabilities assumed at the date of acquisition:

(In thousands) June 1, 2018Accounts receivable $ 11,629Inventories 9,310Other current assets 575Property, plant and equipment 1,107Intangible assets 59,700Total assets acquired 82,321

Accounts payable 5,068Other current liabilities 7,415Total liabilities assumed 12,483

Net assets acquired 69,838Goodwill 61,719Purchase price $ 131,557

The goodwill is attributable to the significant growth and synergies expected to ariseas a result of the acquisition. All of the goodwill was assigned to the Outdoorsegment and is expected to be deductible for tax purposes.

The Altra® trademark, which management determined to have an indefinite life, hasbeen valued at $46.4 million. Amortizable intangible assets have been assignedvalues of $13.0 million for customer relationships and $0.3 million for distributionagreements. Customer relationships are being amortized using an acceleratedmethod over 15 years. Distribution agreements are being amortized on a straight-line basis over four years.

Total transaction expenses for the Altra acquisition were $2.3 million, all of whichwere recognized in the selling, general and administrative expenses line item in theConsolidated Statement of Income during the six months ended September 2018.

Pro forma results of operations of the Company would not be materially different asa result of the Altra acquisition and therefore are not presented.


NOTE 5 — DISCONTINUED OPERATIONS AND OTHER DIVESTITURESThe Company continuously assesses the composition of its portfolio to ensure it is aligned with its strategic objectives and positioned to maximize growth and return toshareholders.

Discontinued Operations

Jeans BusinessOn May 22, 2019, VF completed the spin-off its Jeans business, which included theWrangler®, Lee® and Rock & Republic® brands, as well as the VF OutletTMbusiness, into an independent, publicly traded company now operating under thename Kontoor Brands, Inc. ("Kontoor Brands") and trading under the symbol "KTB"on the New York Stock Exchange. The spin-off was effected through a distributionto VF shareholders of one share of Kontoor Brands common stock for every sevenshares of VF common stock held on the record date of May 10, 2019. Accordingly,the Company has reported the results of the Jeans business and the related cashflows as discontinued operations in the Consolidated Statements of Income andConsolidated Statements of Cash Flows, respectively, and presented the relatedassets and liabilities as assets and liabilities of discontinued operations in theConsolidated Balance Sheets, through the date the spin-off was completed.

In connection with the spin-off, Kontoor Brands entered into a credit agreement withrespect to $1.55 billion in senior secured credit facilities consisting of a seniorsecured five-year $750.0 million term loan A facility, a senior secured seven-year$300.0 million term loan B facility and a five-year $500.0 million senior securedrevolving credit facility (collectively, the "Kontoor Credit Facilities"). Prior to theeffective date of the spin-off, Kontoor Brands incurred $1.05 billion of indebtednessunder the Kontoor Credit Facilities, which was primarily used to fund a transfer of$906.1 million to VF and its subsidiaries, net of $126.8 million of cash received fromVF. As a result of the spin-off, VF divested net assets of $54.9 million, including theindebtedness under the Kontoor Credit Facilities. Also included in the net assetsdivested was $75.3 million of net accumulated other comprehensive lossesattributable to the Jeans business, primarily related to foreign currency translation.

The results of the Wrangler®, Lee® and Rock & Republic® brands were previouslyreported in the Jeans segment, the results of the Wrangler® RIGGS brand werepreviously reported in the Work segment, and the results of the non-VF productssold in VF OutletTM stores were previously reported in the Other category includedin the reconciliation of segment revenues and segment profit. The results of theJeans business recorded in the income (loss) from discontinued operations, net oftax line item in the Consolidated Statements of Income were a loss of $48.0 millionfor the six months ended September 2019, and income of $91.0 million and $189.6million for the three and six months ended September 2018, respectively.

Certain corporate overhead costs and segment costs previously allocated to theJeans business for segment reporting purposes did not qualify for classificationwithin discontinued operations and have been reallocated to continuing operations.The results of the Jeans business reported as discontinued operations include$59.5 million of separation and related expenses during the six months endedSeptember 2019.

In connection with the spin-off of the Jeans business, the Company entered intoseveral agreements with Kontoor Brands that govern the relationship of the partiesfollowing the spin-off including the Separation and Distribution Agreement, the TaxMatters Agreement, the Transition Services Agreement, the VF Intellectual PropertyLicense Agreement and the Employee Matters Agreement. Under the terms of theTransition Services Agreement, the Company and Kontoor Brands agreed toprovide each other certain transitional services including information technology,information management, human resources, employee benefits administration,supply chain, facilities, and other limited finance and accounting related services forperiods up to 24 months. Payments and operating expense reimbursements fortransition services are recorded within the reportable segments or within thecorporate and other expenses line item, in the reconciliation of segment profit inNote 15, based on the function providing the service.

Nautica® Brand Business

During the three months ended December 30, 2017, the Company reached thestrategic decision to exit the Nautica® brand business, and determined that it metthe held-for-sale and discontinued operations accounting criteria. Accordingly, theCompany has reported the results of the Nautica® brand business and the relatedcash flows as discontinued operations in the Consolidated Statements of Incomeand Consolidated Statements of Cash Flows, respectively, and presented therelated held-for-sale assets and liabilities as assets and liabilities of discontinuedoperations in the Consolidated Balance Sheets, through the date of sale.

On April 30, 2018, VF completed the sale of the Nautica® brand business. TheCompany received proceeds of $285.8 million, net of cash sold, resulting in a finalafter-tax loss on sale of $38.2 million, including a $5.0 million decrease in theestimated loss on sale that was recorded in the income (loss) from discontinuedoperations, net of tax line item in the Consolidated Statement of Income for the sixmonths ended September 2018.

The results of the Nautica® brand business recorded in the income (loss) fromdiscontinued operations, net of tax line item in the Consolidated Statement ofIncome were income of $0.4 million (including a $5.0 million decrease in theestimated loss on sale) for the six months ended September 2018.

Under the terms of the transition services agreement, the Company provided certainservices for periods up to 12 months from the closing date of the transaction.Revenue and related expense items associated with the transition services wererecorded in the Other category, and operating expense reimbursements wererecorded within the corporate and other expenses line item, in the reconciliation ofsegment revenues and segment profit in Note 15.


Summarized Discontinued Operations Financial InformationThe following table summarizes the major line items for the Jeans business and Nautica® brand business that are included in the income (loss) from discontinued operations,net of tax line item in the Consolidated Statements of Income:

Three Months Ended September Six Months Ended September (In thousands) 2019 2018 2019 2018Net revenues $ — $ 687,996 $ 335,203 $ 1,360,920Cost of goods sold — 405,210 203,124 799,604Selling, general and administrative expenses — 169,103 152,798 335,034Interest, net — 1,308 (552 ) 2,277Other income (expense), net — (2,085 ) (667 ) (3,054 )Income (loss) from discontinued operations before

income taxes — 112,906 (21,938 ) 225,505Gain on the sale of discontinued operations before income

taxes — — — 4,206Total income (loss) from discontinued operations before

income taxes — 112,906 (21,938 ) 229,711Income tax expense (a) — (21,909 ) (26,090 ) (39,720 )Income (loss) from discontinued operations, net of tax $ — $ 90,997 $ (48,028 ) $ 189,991

(a) Income tax expense for the six months ended September 2019 includes additional tax expense on nondeductible transaction costs and uncertain taxpositions.

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:

(In thousands) September 2019 March 2019 September 2018Cash and equivalents $ — $ 97,892 $ 85,993Accounts receivable, net — 242,941 234,790Inventories — 510,370 524,851Other current assets — 44,827 39,062Property, plant and equipment, net — 142,091 141,860Intangible assets — 51,913 54,186Goodwill — 213,570 219,683Other assets — 74,144 66,125Total assets of discontinued operations $ — $ 1,377,748 $ 1,366,550

Short-term borrowings $ — $ 5,995 $ 5,617Accounts payable — 113,866 128,878Accrued liabilities — 141,621 123,929Other liabilities — 48,581 44,616Total liabilities of discontinued operations $ — $ 310,063 $ 303,040


Other Divestitures

Reef® Brand BusinessDuring the three months ended September 2018, the Company reached thedecision to sell the Reef® brand business, which was included in the Activesegment. The Company determined the associated assets and liabilities met theheld‑for‑sale accounting criteria and were classified accordingly in the September2018 Consolidated Balance Sheet.

VF signed a definitive agreement for the sale of the Reef® brand business onOctober 2, 2018, and completed the transaction on October 26, 2018. VF receivedcash proceeds of $139.4 million, and recorded a $14.4 million final loss on sale forthe year ended March 2019, of which an estimated $9.9 million loss was recordedin the three months ended September 2018 based on the anticipated terms of thesale. The loss was included in the other income (expense), net line item in theConsolidated Statement of Income.

Van Moer BusinessDuring the three months ended September 2018, the Company reached thedecision to sell the Van Moer business, which was acquired in connection with theWilliamson-Dickie business and included in the Work segment. The Companydetermined the associated assets and liabilities of the business met theheld‑for‑sale accounting criteria and were classified accordingly in the September2018 Consolidated Balance Sheet.

VF completed the sale of the Van Moer business on October 5, 2018, and receivedcash proceeds of €7.0 million ($8.1 million). VF recorded a $22.4 million final losson sale, which was included in the other income (expense), net line item in theConsolidated Statement of Income for the three months ended September 2018.

Summarized Held-for-Sale Financial InformationThe following table presents the assets and liabilities of the Reef® brand and Van Moer businesses at September 2018:

(in thousands) September 2018Cash $ 2,059Accounts receivable, net 19,013Inventories 32,856Other current assets 1,649Property, plant and equipment, net 4,859Intangible assets 83,332Goodwill 48,381Other assets 24Allowance to reduce assets to estimated fair value, less costs to sell (32,321 )Total assets held-for-sale $ 159,852

Accounts payable $ 4,030Accrued liabilities 5,857Other liabilities 1,471Total liabilities held-for-sale $ 11,358


NOTE 6 — SALE OF ACCOUNTS RECEIVABLEIn connection with the spin-off of its Jeans business, VF terminated its agreement with the financial institution to sell trade accounts receivable on a recurring, non-recoursebasis. As of September 2019, the Company had no outstanding amounts related to accounts receivable previously sold to the financial institution and no other obligations orliabilities related to the agreement.

NOTE 7 — INVENTORIES

(In thousands) September 2019 March 2019 September 2018Finished products $ 1,747,479 $ 1,284,293 $ 1,579,555Work-in-process 78,123 73,968 73,363Raw materials 65,114 74,399 70,139Total inventories $ 1,890,716 $ 1,432,660 $ 1,723,057

NOTE 8 — INTANGIBLE ASSETS

September 2019 March 2019

(In thousands)

WeightedAverage

AmortizationPeriod

AmortizationMethod Cost

AccumulatedAmortization

NetCarryingAmount

NetCarryingAmount

Amortizable intangible assets: Customer relationships 17 years Accelerated $ 323,365 $ 142,530 $ 180,835 $ 197,129License agreements 19 years Accelerated 7,378 4,752 2,626 2,807Trademark 3 years Straight-line 800 518 282 399Other 8 years Straight-line 8,028 4,584 3,444 4,032

Amortizable intangible assets, net 187,187 204,367Indefinite-lived intangible assets:

Trademarks and trade names 1,732,583 1,767,997Intangible assets, net $ 1,919,770 $ 1,972,364

Intangible assets decreased during the six months ended September 2019 due to the impact of foreign currency fluctuations.

Amortization expense for the three and six months ended September 2019 was $6.2 million and $12.5 million, respectively. Based on the carrying amounts of amortizableintangible assets noted above, estimated amortization expense for the next five years beginning in Fiscal 2020 is $25.3 million, $23.9 million, $22.4 million, $21.0 million and$20.2 million, respectively.

NOTE 9 — GOODWILLChanges in goodwill are summarized by reportable segment as follows:

(In thousands) Outdoor Active Work Total Balance, March 2019 $ 983,889 $ 393,956 $ 163,469 $ 1,541,314

Currency translation (5,988 ) (5,203 ) (738 ) (11,929 ) Balance, September 2019 $ 977,901 $ 388,753 $ 162,731 $ 1,529,385

No impairment charges were recorded during the six months ended September 2019 and there are no remaining accumulated impairment charges.


NOTE 10 — LEASESVF determines if an arrangement is or contains a lease at contract inception anddetermines its classification as an operating or finance lease at leasecommencement. The Company leases certain retail locations, office space,distribution facilities, machinery and equipment, and vehicles. While the substantialmajority of these leases are operating leases, certain distribution centers and officespaces are finance leases.

Leases for real estate typically have initial terms ranging from 3 to 15 years,generally with renewal options. Leases for equipment typically have initial termsranging from 2 to 5 years and vehicle leases typically have initial terms ranging from1 to 8 years. In determining the lease term used in the lease right-of-use asset andlease liability calculations, the Company considers various factors such as marketconditions and the terms of any renewal or termination options that may exist. Whendeemed reasonably certain, the renewal and termination options are included in thedetermination of the lease term and calculation of the lease right-of-use assets andlease liabilities.

Most leases have fixed rental payments. Many of the real estate leases also requireadditional variable payments for occupancy-related costs, real estate taxes andinsurance, as well as other payments (i.e., contingent rent) owed when sales atindividual retail store locations exceed a stated base amount. Variable leasepayments are excluded from the measurement of the lease liability and arerecognized in profit and loss in the period in which the event or conditions thattriggers those payments occur.

VF estimates the amount it expects to pay to the lessor under a residual valueguarantee and includes it in lease payments used to measure the lease liability onlyfor amounts probable of being owed by VF at the commencement date.

VF calculates lease right-of-use assets and lease liabilities as the present value oflease payments over the lease term at

commencement date. When readily determinable, the Company uses the implicitrate to determine the present value of lease payments, which generally does nothappen in practice. As the rate implicit in the majority of the Company's leases isnot readily determinable, the Company uses its incremental borrowing rate basedon the information available at the lease commencement date, including the leaseterm, currency, country specific risk premium and adjustments for collateralizeddebt.

Operating lease expense is recorded as a single lease cost on a straight-line basisover the lease term. For finance leases, right-of-use asset amortization and intereston lease liabilities are presented separately in the Consolidated Statements ofIncome.

The Company assesses whether a sale leaseback transaction qualifies as a salewhen the transaction occurs. For transactions qualifying as a sale, VF derecognizesthe underlying asset and recognizes the entire gain or loss at the time of the sale.The corresponding lease entered into with the buyer-lessor is accounted for as anoperating lease. During the six months ended September 2019, the Companyentered into a sale leaseback transaction for certain office real estate and relatedassets. The transaction qualified as a sale, and thus the Company recognized again of $11.3 million resulting from the transaction during the six months endedSeptember 2019.

As of September 2019, the Company has signed certain distribution center leasesthat have not yet commenced but will create significant rights and obligations. Theleases will commence in Fiscal 2020 and Fiscal 2021 and have lease terms of 15years. Other leases signed that have not yet commenced are not individuallysignificant. The Company does not have material subleases.

The assets and liabilities related to operating and finance leases were as follows:

(In thousands) Location in Consolidated Balance Sheet September 2019 Assets:

Operating lease assets Operating lease right-of-use assets $ 1,263,903 Finance lease assets Property, plant and equipment 23,468

Total lease assets $ 1,287,371

Liabilities: Current

Operating lease liabilities Accrued liabilities $ 295,364 Finance lease liabilities Current portion of long-term debt 4,986

Noncurrent Operating lease liabilities Operating lease liabilities 1,028,363 Finance lease liabilities Long-term debt 26,278

Total lease liabilities $ 1,354,991


The components of lease costs were as follows:

(In thousands) Three Months Ended

September 2019 Six Months EndedSeptember 2019

Operating lease cost $ 108,969 $ 210,428 Finance lease cost – amortization of right-of-use assets 1,063 2,032 Finance lease cost – interest on lease liabilities 270 554 Short-term lease cost 696 1,265 Variable lease cost 29,785 57,986 Gain recognized from sale-leaseback transactions — (11,329 ) Total lease cost $ 140,783 $ 260,936

Supplemental cash flow information related to leases was as follows:

(In thousands) Six Months EndedSeptember 2019

Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows – operating leases $ 213,368 Operating cash flows – finance leases 553 Financing cash flows – finance leases 2,462

Right-of-use assets obtained in exchange for lease liabilities: Operating leases (a) 225,851 Finance leases —

(a) Excludes amounts recorded upon adoption of ASC842.

Lease terms and discount rates were as follows:

September 2019 Weighted average remaining lease term:

Operating leases 5.59 years Finance leases 13.51 years

Weighted average discount rate: Operating leases 2.50 % Finance leases 3.17 %

Maturities of operating and finance lease liabilities for the next five fiscal years (including the remainder of Fiscal 2020) and thereafter as of September 2019 were as follows:

(In thousands) Operating Leases Finance Leases Total Remainder of 2020 $ 137,614 $ 2,512 $ 140,126 2021 384,214 6,532 390,746 2022 271,311 1,911 273,222 2023 198,459 1,626 200,085 2024 129,100 1,550 130,650 Thereafter 305,434 23,496 328,930 Total lease payments 1,426,132 37,627 1,463,759

Less: present value adjustment 102,405 6,363 108,768 Present value of lease liabilities $ 1,323,727 $ 31,264 $ 1,354,991

The Company excluded approximately $283.5 million of leases (undiscounted basis) that have not yet commenced. These leases will commence beginning in Fiscal 2020 with lease termsof 2 to 15 years.


Future minimum lease payments under operating leases with noncancelable lease terms in excess of one year from continuing operations as of March 2019, prior to theadoption of ASC 842, were as follows:

(In thousands) Operating Leases2020 $ 320,2242021 287,8292022 212,9182023 154,9202024 100,789Thereafter 251,228Total lease payments $ 1,327,908

NOTE 11 — PENSION PLANSThe components of pension cost (income) for VF’s defined benefit plans were as follows:

Three Months Ended September Six Months Ended September (In thousands) 2019 2018 2019 2018Service cost – benefits earned during the period $ 3,410 $ 5,561 $ 6,791 $ 11,785Interest cost on projected benefit obligations 14,743 15,818 29,504 31,831Expected return on plan assets (23,151 ) (23,197 ) (46,329 ) (47,031 )Settlement charges 519 1,342 519 8,184Curtailments — — — 9,483Amortization of deferred amounts:

Net deferred actuarial losses 4,014 6,655 8,033 15,477Deferred prior service costs (credits) 12 (59 ) 25 610

Net periodic pension cost (income) $ (453) $ 6,120 $ (1,457) $ 30,339

The amounts reported in these disclosures for prior periods have not been segregated between continuing and discontinued operations.

VF has reported the service cost component of net periodic pension cost (income)in operating income and the other components (which include interest cost,expected return on plan assets, amortization of prior service costs (credits) andactuarial losses) in the other income (expense), net line item in the ConsolidatedStatements of Income.

VF contributed $4.7 million to its defined benefit plans during the six months endedSeptember 2019, and intends to make approximately $21.5 million of contributionsduring the remainder of Fiscal 2020.

In the first quarter of Fiscal 2019, VF approved a freeze of all future benefit accrualsunder the U.S. qualified defined benefit pension

plan and the supplemental defined benefit pension plan, effective December 31,2018. Accordingly, the Company recognized a $9.5 million pension curtailment lossin the other income (expense), net line item in the Consolidated Statement ofIncome for the six months ended September 2018.

Additionally, VF reported $0.5 million in settlement charges in the other income(expense), net line item in the Consolidated Statements of Income for the three andsix months ended September 2019, as well as $1.3 million and $8.2 million for thethree and six months ended September 2018, respectively. The settlement chargesrelated to the recognition of deferred actuarial losses resulting from lump sumpayments of retirement benefits in the supplemental defined benefit pension plan.

Actuarial assumptions used in the interim valuation were reviewed and revised as appropriate. The discount rate used to determine the pension obligation was as follows:

September 2019 Supplemental defined benefit pension plan 3.23 %


NOTE 12 — CAPITAL AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)Common Stock

During the six months ended September 2019, the Company did not purchaseshares of Common Stock in open market transactions under its share repurchaseprogram authorized by VF’s Board of Directors. These are treated as treasury stocktransactions when shares are repurchased.

Common Stock outstanding is net of shares held in treasury which are, insubstance, retired. There were no shares held in treasury at the end of September2019, March 2019 or September 2018. The

excess of the cost of treasury shares acquired over the $0.25 per share stated valueof Common Stock is deducted from retained earnings.

Prior to March 2019, VF Common Stock was also held by the Company’s deferredcompensation plans and was treated as treasury shares for financial reportingpurposes. As of September 2019, there were no shares held in the Company'sdeferred compensation plans.

Balances related to shares held for deferred compensation plans were as follows:

(In thousands, except share amounts) September 2019 March 2019 September 2018Shares held for deferred compensation plans — — 169,114Cost of shares held for deferred compensation plans $ — $ — $ 2,561

Accumulated Other Comprehensive Income (Loss)

Comprehensive income consists of net income and specified components of other comprehensive income (“OCI”), which relates to changes in assets and liabilities that arenot included in net income under GAAP but are instead deferred and accumulated within a separate component of stockholders’ equity in the balance sheet. VF’scomprehensive income is presented in the Consolidated Statements of Comprehensive Income. The deferred components of OCI are reported, net of related income taxes,in accumulated OCI in stockholders’ equity, as follows:

(In thousands) September 2019 March 2019 September 2018Foreign currency translation and other $ (715,286 ) $ (725,679 ) $ (665,962 )Defined benefit pension plans (298,326 ) (243,184 ) (226,039 )Derivative financial instruments 82,887 66,788 29,085Accumulated other comprehensive income (loss) $ (930,725 ) $ (902,075 ) $ (862,916 )

The changes in accumulated OCI, net of related taxes, were as follows:


(In thousands)

Foreign CurrencyTranslation and

Other Defined BenefitPension Plans

Derivative FinancialInstruments Total

Balance, June 2019 $ (635,901) $ (290,468) $ 58,983 $ (867,386) Other comprehensive income (loss) before reclassifications (79,385) (10,896) 44,348 (45,933) Amounts reclassified from accumulated other comprehensive income (loss) — 3,038 (20,444) (17,406) Net other comprehensive income (loss) (79,385) (7,858) 23,904 (63,339) Balance, September 2019 $ (715,286) $ (298,326) $ 82,887 $ (930,725)


(In thousands)




Balance, June 2018 $ (651,739) $ (230,517) $ 178 $ (882,078)Other comprehensive income (loss) before reclassifications (14,223) (1,416) 15,151 (488)Amounts reclassified from accumulated other comprehensive income (loss) — 5,894 13,756 19,650Net other comprehensive income (loss) (14,223) 4,478 28,907 19,162Balance, September 2018 $ (665,962) $ (226,039) $ 29,085 $ (862,916)



In thousands




Balance, Balance, March 2019 $ (725,679) $ (243,184) $ 66,788 $ (902,075) Adoption of new accounting standard, ASU 2018-02 (9,088) (50,402) (2,371) (61,861) Other comprehensive income (loss) before reclassifications (63,613) (11,719) 55,248 (20,084) Amounts reclassified from accumulated other comprehensive income (loss) — 6,185 (28,183) (21,998) Spin-off of Jeans Business 83,094 794 (8,595) 75,293 Net other comprehensive income (loss) 10,393 (55,142) 16,099 (28,650) Balance, September 2019 $ (715,286) $ (298,326) $ 82,887 $ (930,725)


In thousands



DerivativeFinancial

Instruments TotalBalance, March 2018 $ (476,869) $ (289,618) $ (97,543) $ (864,030)Other comprehensive income (loss) before reclassifications (189,093) 38,812 98,422 (51,859)Amounts reclassified from accumulated other comprehensive income (loss) — 24,767 28,206 52,973Net other comprehensive income (loss) (189,093) 63,579 126,628 1,114Balance, September 2018 $ (665,962) $ (226,039) $ 29,085 $ (862,916)

Reclassifications out of accumulated OCI were as follows:

(In thousands)Details About Accumulated OtherComprehensive Income (Loss)Components

Affected Line Item in theConsolidated Statements of Income

Three Months Ended September Six Months Ended September 2019 2018 2019 2018 Amortization of defined benefit pension plans: Net deferred actuarial losses Other income (expense), net $ (4,014) $ (6,655) $ (8,033) $ (15,477) Deferred prior service (costs) credits Other income (expense), net (12) 59 (25) (610)

Pension curtailment losses and settlementcharges

Other income (expense), net (519) (1,342) (519) (17,667)

Total before tax (4,545) (7,938) (8,577) (33,754) Tax benefit 1,507 2,044 2,392 8,987 Net of tax (3,038) (5,894) (6,185) (24,767) Gains (losses) on derivative financial instruments: Foreign exchange contracts Net sales (2,814) 4,527 (5,719) 5,472 Foreign exchange contracts Cost of goods sold 22,727 (14,638) 33,832 (26,576)

Foreign exchange contracts Selling, general and administrativeexpenses 1,382 (1,522) 2,098 (4,220)

Foreign exchange contracts Other income (expense), net 3,696 (970) 6,568 (2,363) Interest rate contracts Interest expense (1,303) (1,243) (2,596) (2,476) Total before tax 23,688 (13,846) 34,183 (30,163) Tax (expense) benefit (3,244) 90 (6,000) 1,957 Net of tax 20,444 (13,756) 28,183 (28,206) Total reclassifications for the period, net of tax $ 17,406 $ (19,650) $ 21,998 $ (52,973)


NOTE 13 — STOCK-BASED COMPENSATIONSpin-Off of Jeans BusinessIn connection with the spin-off of the Jeans business on May 22, 2019, theCompany adjusted its outstanding equity awards in accordance with the terms ofthe Employee Matters Agreement between the Company and Kontoor Brands.Adjustments to the underlying shares and terms of outstanding stock options,restricted stock units ("RSUs") and restricted stock were made to preserve theintrinsic value of the awards immediately before the separation. The adjustment ofthe underlying shares and exercise prices, as applicable, was determined using aratio based on the relative values of the VF pre-distribution stock value and the VFpost-distribution stock value as determined by the Company. The outstandingawards continue to vest over their original vesting

periods. The Company will recognize $13.0 million of total incrementalcompensation cost related to the adjustment of the VF equity awards, of which $0.3million and $12.3 million were recognized during the three and six months endedSeptember 2019, respectively.

In connection with the spin-off, stock options to purchase 756,709 shares of VFCommon Stock, 52,018 performance-based RSUs, 79,187 nonperformance-basedRSUs and 112,763 restricted shares of VF Common Stock were converted intoKontoor Brands equity awards.

Incentive Equity Awards GrantedDuring the six months ended September 2019, VF granted stock options to employees and nonemployee members of VF's Board of Directors to purchase 1,478,107 sharesof its Common Stock at a weighted average exercise price of $84.31 per share. The exercise price of each option granted was equal to the fair market value of VF CommonStock on the date of grant. Employee stock options vest in equal annual installments over three years. Stock options granted to nonemployee members of VF's Board ofDirectors vest upon grant and become exercisable one year from the date of grant.

The grant date fair value of each option award was calculated using a lattice option-pricing valuation model, which incorporated a range of assumptions for inputs as follows:

Six Months Ended September 2019 Expected volatility 24% to 27% Weighted average expected volatility 25% Expected term (in years) 6.1 to 7.6 Weighted average dividend yield 2.5% Risk-free interest rate 1.8% to 2.4% Weighted average fair value at date of grant $17.22

Also during the six months ended September 2019, VF granted 272,277performance-based RSUs to employees that enable them to receive shares of VFCommon Stock at the end of a three-year performance cycle. Each performance-based RSU has a potential final payout ranging from zero to two shares of VFCommon Stock. The number of shares earned by participants, if any, is based onachievement of three-year financial targets set by the Talent and CompensationCommittee of the Board of Directors. Shares will be issued to participants in theyear following the conclusion of the three-year performance period. The weightedaverage fair market value of VF Common Stock at the dates the units were grantedwas $84.30 per share.

The actual number of performance-based RSUs earned may also be adjustedupward or downward by 25% of the target award, based on how VF’s totalshareholder return (“TSR”) over the three-year period compares to the TSR forcompanies included in the Standard & Poor’s 500 Consumer Discretionary Index.The grant date fair value of the TSR-based adjustment related to the performance-based RSU grants was determined using a Monte Carlo simulation technique thatincorporates option-pricing model inputs, and was $7.11 per share.

VF granted 10,780 nonperformance-based RSUs to nonemployee members of theBoard of Directors during the six months ended September 2019. These units vestupon grant and will be settled

in shares of VF Common Stock one year from the date of grant. The fair marketvalue of VF Common Stock at the date the units were granted was $84.23 pershare.

VF granted 7,500 nonperformance-based RSUs to certain key employees ininternational jurisdictions during the six months ended September 2019. Theseunits vest 50% over a two-year period and 50% over a four-year period from thedate of grant and each unit entitles the holder to one share of VF Common Stock.The fair market value of VF Common Stock at the date the units were granted was$84.23 per share.

In addition, VF granted 163,559 nonperformance-based RSUs to employees duringthe six months ended September 2019. These awards vest 50% over a two-yearperiod and 50% over a four-year period from the date of grant and entitle the holderto one share of VF Common Stock. The weighted average fair market value of VFCommon Stock at the dates the units were granted was $84.39 per share.

VF granted 63,621 restricted shares of VF Common Stock to certain members ofmanagement during the six months ended September 2019. These shares vestover periods of up to four years from the date of grant. The weighted average fairmarket value of VF Common Stock at the dates the shares were granted was$86.03 per share.


NOTE 14 — INCOME TAXESOn May 19, 2019, Switzerland voted to approve the Federal Act on Tax Reform andAHV Financing ("Swiss Tax Act"). Certain provisions of the Swiss Tax Act wereenacted during the second quarter of Fiscal 2020, which resulted in adjustments todeferred tax assets and liabilities. A net tax benefit of $164.4 million was recordedduring the second quarter. It is expected that additional provisions may be enactedin subsequent periods resulting in further adjustments. We continue to monitor andassess the impact the Swiss Tax Act may have on the Company.

The effective income tax rate for the six months ended September 2019 was (8.9)%compared to 14.0% in the 2018 period. The six months ended September 2019included a net discrete tax benefit of $177.6 million, which included a $6.9 milliontax benefit related to stock compensation, a $6.7 million net tax benefit related tounrecognized tax benefits and interest and a $164.4 million tax benefit related to theSwiss Tax Act. The $177.6 million net discrete tax benefit in the 2019 periodreduced the effective income tax rate by 25.9%. The 2018 period included a netdiscrete tax benefit of $1.9 million, which included a $17.6 million tax benefit relatedto stock compensation, a $1.0 million net tax expense related to unrecognized taxbenefits and interest, a $12.9 million net tax expense related to adjustments toprovisional amounts recorded in 2017 under the U.S. Tax Act and a $1.6 million taxexpense related to adjustments to previously recognized state income tax credits.The $1.9 million net discrete tax benefit in the 2018 period reduced the effectiveincome tax rate by 0.3%. Without discrete items, the effective income tax rate forthe six months ended September 2019 increased by 2.7% compared with the 2018period primarily due to a lower percentage of income in lower tax rate jurisdictions.

VF files a consolidated U.S. federal income tax return, as well as separate andcombined income tax returns in numerous state and international jurisdictions. Inthe U.S., the Internal Revenue Service ("IRS") examinations for tax years through2015 have been effectively settled. The examination of Timberland’s 2011 taxreturn is ongoing.

In addition, VF is currently subject to examination by various state and internationaltax authorities. Management regularly assesses the potential outcomes of bothongoing and future examinations for the current and prior years, and has concludedthat VF’s provision for income taxes is adequate. The outcome of any oneexamination is not expected to have a material impact on VF’s consolidatedfinancial statements. Management believes that some of these audits andnegotiations will conclude during the next 12 months.

VF was granted a ruling which lowered the effective income tax rate on taxableearnings for years 2010 through 2014 under Belgium’s excess profit tax regime. InFebruary 2015, the European Union Commission (“EU”) opened a state aidinvestigation into Belgium’s rulings. On January 11, 2016, the EU announced itsdecision that these rulings were illegal and ordered that tax benefits granted underthese rulings should be collected from the affected companies, including VF.

On March 22, 2016, the Belgium government filed an appeal seeking annulment ofthe EU decision. Additionally, on June 21, 2016, VF Europe BVBA filed its ownapplication for annulment of the EU decision.

On December 22, 2016, Belgium adopted a law which entitled the Belgium taxauthorities to issue tax assessments, and demand timely payments from companieswhich benefited from the excess profits regime. On January 10, 2017, VF EuropeBVBA received an assessment for €31.9 million tax and interest related to excessprofits benefits received in prior years. VF Europe BVBA remitted €31.9 million($33.9 million) on January 13, 2017, which was recorded as an income taxreceivable based on the expected success of the aforementioned requests forannulment. An additional assessment of €3.1 million ($3.8 million) was received andpaid in January 2018. On February 14, 2019 the General Court annulled the EUdecision and on April 26, 2019 the EU appealed the General Court’s annulment.Both listed requests for annulment remain open and unresolved. Additionally, theEU has initiated proceedings related to individual rulings granted by Belgium,including the ruling granted to VF. If this matter is adversely resolved, theseamounts will not be collected by VF.

During the six months ended September 2019, the amount of net unrecognized taxbenefits and associated interest decreased by $25.5 million to $148.4 million.Management believes that it is reasonably possible that the amount of unrecognizedincome tax benefits and interest may decrease during the next 12 months byapproximately $14.9 million related to the completion of examinations and othersettlements with tax authorities and the expiration of statutes of limitations, of which$9.7 million would reduce income tax expense.


NOTE 15 — REPORTABLE SEGMENT INFORMATIONThe chief operating decision maker allocates resources and assesses performancebased on a global brand view which represents VF's operating segments. Theoperating segments have been evaluated and combined into reportable segmentsbecause they meet the similar economic characteristics and qualitative aggregationcriteria set forth in the relevant accounting guidance. The Company's reportablesegments have been identified as:

Outdoor, Active and Work. We have included an Other category in the table belowfor purposes of reconciliation of revenues and profit, but it is not considered areportable segment. Other includes results related to the sale of non-VF productsand transition services primarily related to the sale of the Nautica® brand business.

Financial information for VF's reportable segments was as follows:

Three Months Ended September Six Months Ended September (In thousands) 2019 2018 2019 2018Segment revenues:

Outdoor $ 1,525,937 $ 1,466,503 $ 2,136,557 $ 2,035,103Active 1,413,634 1,299,961 2,645,760 2,436,898Work 435,627 451,661 858,098 874,954Other 18,070 1,265 24,332 9,570Total segment revenues $ 3,393,268 $ 3,219,390 $ 5,664,747 $ 5,356,525

Segment profit: Outdoor $ 256,382 $ 258,121 $ 176,112 $ 174,626Active 388,200 351,051 695,766 620,248Work 39,210 51,320 86,235 100,247Other 2,381 717 765 2,950Total segment profit 686,173 661,209 958,878 898,071

Corporate and other expenses (a) (108,921 ) (148,193 ) (242,736 ) (291,381 )Interest expense, net (15,827 ) (26,821 ) (30,825 ) (51,674 )Income from continuing operations before income taxes $ 561,425 $ 486,195 $ 685,317 $ 555,016(a) Certain corporate overhead and other costs of $21.0 million and $45.6 million for the three and six-month periods ended September 2018, respectively, previously allocated to the former

Jeans segment and Other category for segment reporting purposes, have been reallocated to continuing operations.


NOTE 16 — EARNINGS PER SHARE

Three Months Ended September Six Months Ended September (In thousands, except per share amounts) 2019 2018 2019 2018Earnings per share – basic:

Income from continuing operations $ 649,001 $ 416,124 $ 746,250 $ 477,488Weighted average common shares outstanding 397,751 395,892 397,239 395,029Earnings per share from continuing operations $ 1.63 $ 1.05 $ 1.88 $ 1.21

Earnings per share – diluted: Income from continuing operations $ 649,001 $ 416,124 $ 746,250 $ 477,488Weighted average common shares outstanding 397,751 395,892 397,239 395,029Incremental shares from stock options and other dilutive

securities 4,510 6,047 4,849 5,715Adjusted weighted average common shares outstanding 402,261 401,939 402,088 400,744Earnings per share from continuing operations $ 1.61 $ 1.04 $ 1.86 $ 1.19

Outstanding options to purchase approximately 1.5 million shares were excludedfrom the calculations of diluted earnings per share for both the three and six-monthperiods ended September 2019, and outstanding options to purchase approximately20,000 and 0.9 million shares were excluded from the calculations of dilutedearnings per share for the three and six-month periods ended September 2018,respectively, because the effect of their inclusion would have been anti-dilutive.

In addition, 0.8 million shares of performance-based RSUs were excluded from thecalculations of diluted earnings per share for both the three and six-month periodsended September 2019, and 0.9 million shares of performance-based RSUs wereexcluded from the calculations of diluted earnings per share for both the three andsix-month periods ended September 2018, because these units were notconsidered to be contingent outstanding shares in those periods.

NOTE 17 — FAIR VALUE MEASUREMENTSFinancial assets and financial liabilities measured and reported at fair value areclassified in a three-level hierarchy that prioritizes the inputs used in the valuationprocess. A financial instrument’s categorization within the valuation hierarchy isbased on the lowest level of any input that is significant to the fair valuemeasurement. The hierarchy is based on the observability and objectivity of thepricing inputs, as follows:

• Level 1 — Quoted prices in active markets for identical assets orliabilities.

• Level 2 — Significant directly observable data (other than Level 1 quotedprices) or significant indirectly observable

data through corroboration with observable market data. Inputs wouldnormally be (i) quoted prices in active markets for similar assets or liabilities,(ii) quoted prices in inactive markets for identical or similar assets or liabilities,or (iii) information derived from or corroborated by observable market data.

• Level 3 — Prices or valuation techniques that require significantunobservable data inputs. These inputs would normally be VF’s own dataand judgments about assumptions that market participants would use inpricing the asset or liability.


Recurring Fair Value MeasurementsThe following table summarizes financial assets and financial liabilities that are measured and recorded in the consolidated financial statements at fair value on a recurringbasis:

Total Fair Value

Fair Value Measurement Using (a) (In thousands) Level 1 Level 2 Level 3 September 2019 Financial assets:

Cash equivalents: Money market funds $ 294,095 $ 294,095 $ — $ — Time deposits 5,335 5,335 — —

Derivative financial instruments 90,462 — 90,462 — Investment securities 126,367 119,443 6,924 —

Financial liabilities: Derivative financial instruments 12,352 — 12,352 — Deferred compensation 135,313 — 135,313 —

Total Fair Value

Fair Value Measurement Using (a) (In thousands) Level 1 Level 2 Level 3 March 2019 Financial assets:

Cash equivalents: Money market funds $ 248,560 $ 248,560 $ — $ — Time deposits 8,257 8,257 — —

Derivative financial instruments 92,771 — 92,771 — Investment securities 186,698 176,209 10,489 —

Financial liabilities: Derivative financial instruments 22,337 — 22,337 — Deferred compensation 199,336 — 199,336 —

The amounts reported in the table above for prior periods have not been segregated between continuing and discontinued operations. The March 2019 balances include $50.8 million ofdeferred compensation liabilities and associated assets related to the Jeans business, which were transferred in connection with the spin-off.

(a) There were no transfers among the levels within the fair value hierarchy during the six months ended September 2019 or the year ended March2019.

VF’s cash equivalents include money market funds and short-term time depositsthat approximate fair value based on Level 1 measurements. The fair value ofderivative financial instruments, which consist of foreign exchange forwardcontracts, is determined based on observable market inputs (Level 2), includingspot and forward exchange rates for foreign currencies, and considers the creditrisk of the Company and its counterparties. Investment securities are held in VF’sdeferred compensation plans as an economic hedge of the related deferredcompensation liabilities. These investments primarily include mutual funds (Level 1)that are valued based on quoted prices in active markets and a separatelymanaged fixed-income fund (Level 2) with underlying investments that are valuedbased on quoted prices for similar assets in active markets or quoted prices ininactive markets for identical assets. Liabilities related to VF’s deferredcompensation plans are recorded at amounts due to participants, based on the fairvalue of the participants’ selection of hypothetical investments.

All other financial assets and financial liabilities are recorded in the consolidatedfinancial statements at cost, except life insurance contracts which are recorded atcash surrender value. These other financial assets and financial liabilities includecash held as demand deposits, accounts receivable, short-term borrowings,accounts payable and accrued liabilities. At September 2019 and March 2019, theircarrying values approximated fair value. Additionally, at September 2019 and March2019, the carrying

values of VF’s long-term debt, including the current portion, were $2,095.9 millionand $2,121.1 million, respectively, compared with fair values of $2,388.4 million and$2,318.6 million at those respective dates. Fair value for long-term debt is a Level 2estimate based on quoted market prices or values of comparable borrowings.

Nonrecurring Fair Value MeasurementsCertain non-financial assets, primarily property, plant and equipment, goodwill andintangible assets, are not required to be measured at fair value on a recurring basisand are reported at carrying value. However, these assets are required to beassessed for impairment whenever events or circumstances indicate that theircarrying value may not be fully recoverable, and at least annually for goodwill andindefinite-lived intangible assets. In the event an impairment is required, the assetis adjusted to estimated fair value, using market-based assumptions.

During the three months ended September 2019, management performed aquantitative impairment analysis of the Timberland reporting unit goodwill andindefinite-lived trademark intangible asset. Based on the analysis, managementconcluded both the goodwill and indefinite-lived trademark intangible asset were notimpaired. See Critical Accounting Policies and Estimates within Management'sDiscussion and Analysis for additional discussion.


NOTE 18 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIESSummary of Derivative Financial Instruments

All of VF’s outstanding derivative financial instruments are foreign exchange forwardcontracts. Although derivatives meet the criteria for hedge accounting at theinception of the hedging relationship, a limited number of derivative contractsintended to hedge assets and liabilities are not designated as hedges foraccounting purposes. The notional amounts of all outstanding derivative

contracts were $2.8 billion at both September 2019 and March 2019 and $2.7 billionat September 2018, consisting primarily of contracts hedging exposures to the euro,British pound, Canadian dollar, Mexican peso, Swiss franc, South Korean won,Swedish krona, Japanese yen, New Zealand dollar and Polish zloty. Derivativecontracts have maturities up to 20 months.

The following table presents outstanding derivatives on an individual contract basis:

Fair Value of Derivativeswith Unrealized Gains

Fair Value of Derivativeswith Unrealized Losses

(In thousands) September

2019 March 2019 September

2018 September

2019 March 2019 September

2018Foreign currency exchange contracts designated as

hedging instruments $ 82,756 $ 92,356 $ 58,646 $ (10,944) $ (21,798) $ (15,218)Foreign currency exchange contracts not

designated as hedging instruments 7,706 415 — (1,408) (539) (146)Total derivatives $ 90,462 $ 92,771 $ 58,646 $ (12,352) $ (22,337) $ (15,364)

VF records and presents the fair values of all of its derivative assets and liabilities in the Consolidated Balance Sheets on a gross basis, even though they are subject tomaster netting agreements. If VF were to offset and record the asset and liability balances of its foreign exchange forward contracts on a net basis in accordance with theterms of its master netting agreements, the amounts presented in the Consolidated Balance Sheets would be adjusted from the current gross presentation to the netamounts as detailed in the following table:

September 2019 March 2019 September 2018 (In thousands)

DerivativeAsset

DerivativeLiability

DerivativeAsset

DerivativeLiability

DerivativeAsset

DerivativeLiability

Gross amounts presented in the ConsolidatedBalance Sheets $ 90,462 $ (12,352) $ 92,771 $ (22,337) $ 58,646 $ (15,364)

Gross amounts not offset in the Consolidated BalanceSheets (12,283) 12,283 (22,274) 22,274 (15,281) 15,281

Net amounts $ 78,179 $ (69) $ 70,497 $ (63) $ 43,365 $ (83)

Derivatives are classified as current or non-current based on maturity dates, as follows:

(In thousands) September 2019 March 2019 September 2018Other current assets $ 81,279 $ 83,582 $ 48,957Accrued liabilities (10,106 ) (18,590 ) (12,349 )Other assets 9,183 9,189 9,689Other liabilities (2,246 ) (3,747 ) (3,015 )

Cash Flow HedgesVF uses derivative contracts primarily to hedge a portion of the exchange risk for its forecasted sales, purchases, production costs, operating costs and intercompanyroyalties. The effects of cash flow hedging included in VF’s Consolidated Statements of Income and Consolidated Statements of Comprehensive Income are summarized asfollows:

(In thousands) Gain (Loss) on Derivatives Recognized in OCI

Three Months Ended September Gain (Loss) on Derivatives Recognized in OCI

Six Months Ended September

Cash Flow Hedging Relationships 2019 2018 2019 2018Foreign currency exchange $ 51,396 $ 15,240 $ 66,170 $ 109,869


(In thousands)

Gain (Loss) Reclassified fromAccumulated OCI into Income Three Months Ended

September

Gain (Loss) Reclassified fromAccumulated OCI into IncomeSix Months Ended September

Location of Gain (Loss) 2019 2018 2019 2018Net sales $ (2,814 ) $ 4,527 $ (5,719 ) $ 5,472Cost of goods sold 22,727 (14,638 ) 33,832 (26,576 )Selling, general and administrative expenses 1,382 (1,522 ) 2,098 (4,220 )Other income (expense), net 3,696 (970 ) 6,568 (2,363 )Interest expense (1,303 ) (1,243 ) (2,596 ) (2,476 )Total $ 23,688 $ (13,846 ) $ 34,183 $ (30,163 )

Derivative Contracts Not Designated as Hedges

VF uses derivative contracts to manage foreign currency exchange risk on third-party accounts receivable and payable, as well as intercompany borrowings. Thesecontracts are not designated as hedges, and are recorded at fair value in theConsolidated Balance Sheets. Changes in the fair values of these instruments arerecognized directly in earnings. Gains or losses on these contracts largely offsetthe net transaction losses or gains on the related assets and liabilities. In the caseof derivative contracts executed on foreign currency exposures that are no longerprobable of occurring, VF de-designates these hedges and the fair value changesof these instruments are also recognized directly in earnings.

Foreign currency exchange contracts not designated as hedges as of September2019 also include contracts still owned by VF that are related to the former Jeansbusiness. In connection with the spin-off, VF transferred the value of theunrecognized gain on these contracts to Kontoor Brands.

The changes in fair value of derivative contracts not designated as hedges thathave been recognized as gains or losses in VF's Consolidated Statements ofIncome were not material for the three and six months ended September 2019 andSeptember 2018.

Other Derivative InformationAt September 2019, accumulated OCI included $82.3 million of pre-tax net deferredgains for foreign currency exchange contracts that are expected to be reclassified toearnings during the next 12 months. The amounts ultimately reclassified to earningswill depend on exchange rates in effect when outstanding derivative contracts aresettled.

VF entered into interest rate swap derivative contracts in 2011 and 2003 to hedgethe interest rate risk for issuance of long-term debt due in 2021 and 2033,respectively. In each case, the contracts were terminated concurrent with theissuance of the debt, and the realized gain or loss was deferred in accumulatedOCI. The remaining pre-tax net deferred loss in accumulated OCI was $9.1 milliona t September 2019, which will be reclassified into interest expense in theConsolidated Statements of Income over the remaining terms of the associateddebt instruments. VF reclassified $1.3 million and $2.6 million of net deferred lossesfrom accumulated OCI into interest expense for the three and six-month periodsended September 2019, respectively, and $1.3 million and $2.5 million for the threeand six-month periods ended September 2018, respectively. VF expects toreclassify $5.4 million to interest expense during the next 12 months.

Net Investment HedgeThe Company has designated its €850.0 million of euro-denominated fixed-ratenotes as a net investment hedge of VF’s investment in certain foreign operations.Because this debt qualified as a nonderivative hedging instrument, foreign currencytransaction gains or losses of the debt are deferred in the foreign currencytranslation and other component of accumulated OCI as an offset to the foreigncurrency translation adjustments on the hedged investments. During the three andsix-month periods ended September 2019, the Company recognized an after-taxgain of $26.3 million and $17.6 million, respectively, in OCI related to the netinvestment hedge, and an after-tax gain of $3.9 million and $44.9 million for thethree and six-month periods ended September 2018, respectively. Any amountsdeferred in accumulated OCI will remain until the hedged investment is sold orsubstantially liquidated.


NOTE 19 — RESTRUCTURINGThe Company typically incurs restructuring charges related to strategic initiativesand cost optimization of business activities, primarily related to severance andemployee-related benefits. During the three and six months ended September 2019,VF leadership approved $1.0 million and $5.8 million, respectively, of restructuringcharges. VF recognized $3.4 million in selling, general and administrative expensesfor the six months ended September 2019, and $1.0 million and $2.4 million in costof goods sold for the three and six months ended September 2019,

respectively. The Company has not recognized significant incremental costs relatedto the actions for the year ended March 2019 or prior periods.

Of the $40.5 million total restructuring accrual at September 2019, $39.4 million isexpected to be paid out within the next 12 months and is classified within accruedliabilities. The remaining $1.1 million will be paid out beyond the next 12 monthsand thus is classified within other liabilities.

The activity in the restructuring accrual for the six-month period ended September 2019 was as follows:

(In thousands) Severance Other Total Accrual at March 2019 $ 58,106 $ 11,035 $ 69,141

Charges 3,257 2,564 5,821 Cash payments (23,186 ) (10,711 ) (33,897 ) Adjustments to accruals 1,721 724 2,445 Currency translation (2,289 ) (693 ) (2,982 )

Accrual at September 2019 $ 37,609 $ 2,919 $ 40,528

Restructuring charges were incurred as follows:

Three Months Ended September Six Months Ended September (In thousands) 2019 2018 2019 2018Outdoor $ 515 $ 9,997 $ 4,730 $ 12,895Active 447 493 467 3,052Work 71 1,111 624 3,939Corporate and other — 995 — 2,501Total $ 1,033 $ 12,596 $ 5,821 $ 22,387

NOTE 20 — CONTINGENCIESThe Company petitioned the U.S. Tax Court to resolve an IRS dispute regarding thetiming of income inclusion associated with the 2011 Timberland acquisition. TheCompany remains confident in our timing and treatment of the income inclusion,and therefore this matter is not reflected in our financial statements. We arevigorously defending our position, and do not expect the resolution to have amaterial adverse impact on the Company's financial position, results of operationsor cash flows. While the IRS argues immediate income inclusion, the Company'sposition is to include the income over a period of years. As the matter relates to2011, nearly half of the timing at dispute has passed with the Company includingthe income, and paying the related tax, on our income

tax returns. The Company notes that should the IRS prevail in this timing matter,the net interest expense would be up to $145 million. Further, this timing matter isimpacted by the U.S. Tax Act that reduced the U.S. corporate income tax rate from35% to 21%. If the IRS is successful, this rate differential would increase taxexpense by approximately $136 million.

The Company is currently involved in other legal proceedings that are ordinary,routine litigation incidental to the business. The resolution of any particularproceeding is not currently expected to have a material adverse impact on theCompany's financial position, results of operations or cash flows.

NOTE 21 — SUBSEQUENT EVENTO n October 15, 2019, VF’s Board of Directors declared a quarterly cash dividend of $0.48 per share, payable on December 20, 2019 to stockholders of record onDecember 10, 2019.


ITEM 2 — MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.VF Corporation (together with its subsidiaries, collectively known as “VF” or the“Company”) uses a 52/53 week fiscal year ending on the Saturday closest toMarch 31 of each year. The Company's current fiscal year runs from March 31,2019 through March 28, 2020 ("Fiscal 2020"). Accordingly, this Form 10-Q presentsour second quarter of Fiscal 2020. For presentation purposes herein, all referencesto periods ended September 2019 and September 2018 relate to the fiscal periodsended on September 28, 2019 and September 29, 2018, respectively. Referencesto March 2019 relate to information as of March 30, 2019.

All per share amounts are presented on a diluted basis and all percentages shownin the tables below and the following discussion have been calculated usingunrounded numbers. All references to foreign currency amounts below reflect thechanges in foreign currency exchange rates from the same period in 2018 and theirimpact on translating foreign currencies into U.S. dollars. All references to foreigncurrency amounts also reflect the impact of foreign currency-denominatedtransactions in countries with highly inflationary economies. VF’s most significantforeign currency exposure relates to business conducted in euro-based countries.Additionally, VF conducts business in other developed and emerging marketsaround the world with exposure to foreign currencies other than the euro, such asArgentina, which is a highly inflationary economy.

On June 1, 2018, VF acquired 100% of the stock of Icon-Altra LLC, plus certainassets in Europe ("Altra"). The business results for Altra have been included in theOutdoor segment. All references to contributions from acquisition below representthe operating results of Altra for the two months ended May 2019, which reflects theone-year anniversary of the acquisition. Refer to Note 4 to VF's consolidatedfinancial statements for additional information on acquisitions.

On October 5, 2018, VF completed the sale of the Van Moer business, which wasincluded in the Work segment. On October 26,

2018, VF completed the sale of the Reef® brand business, which was included inthe Active segment. All references to dispositions below represent the impact ofoperating results of the Reef® brand and Van Moer businesses for the three and sixmonths ended September 2018. The Company determined that the associatedassets and liabilities met the held-for-sale accounting criteria and they wereclassified accordingly in the September 2018 Consolidated Balance Sheet.

On May 22, 2019, VF completed the spin-off of its Jeans business, which includedthe Wrangler®, Lee® and Rock & Republic® brands, as well as the VF OutletTMbusiness, into an independent, publicly traded company now operating under thename Kontoor Brands, Inc. ("Kontoor Brands"). As a result, VF reported theoperating results for the Jeans business in the income (loss) from discontinuedoperations, net of tax line item in the Consolidated Statements of Income and therelated cash flows have been reported as discontinued operations in theConsolidated Statements of Cash Flows, for all periods presented. In addition, therelated assets and liabilities have been reported as assets and liabilities ofdiscontinued operations in the Consolidated Balance Sheets, through the date thespin-off was completed.

Additionally, the Nautica® brand business has been reported as discontinuedoperations in our Consolidated Statements of Income and Consolidated Statementsof Cash Flows, and the related held-for-sale assets and liabilities have beenpresented as assets and liabilities of discontinued operations in the ConsolidatedBalance Sheets, through the April 30, 2018 date of sale.

Unless otherwise noted, amounts, percentages and discussion for all periodsincluded below reflect the results of operations and financial condition from VF’scontinuing operations.

Refer to Note 5 to VF’s consolidated financial statements for additional informationon discontinued operations and other divestitures.

HIGHLIGHTS OF THE SECOND QUARTER OF FISCAL 2020

• Revenues were up 5% to $3.4 billion compared to the three months endedSeptember 2018, primarily due to the $263.3 million contribution from organicgrowth, partially offset by a 2% unfavorable impact from foreign currency.

• Active segment revenues increased 9% to $1.4 billion compared to the threemonths ended September 2018, including a 2% unfavorable impact from foreigncurrency.

• Outdoor segment revenues increased 4% to $1.5 billion compared to the threemonths ended September 2018, including a 2% unfavorable impact from foreigncurrency.

• Direct-to-consumer revenues were up 11% over the 2018 period, including a2% unfavorable impact from foreign currency. E-commerce revenues increased15% in the current period, including a 2% unfavorable impact from foreigncurrency. Direct-to-consumer revenues accounted for 32% of net revenuesfor the three months ended September 2019.

• International revenues increased 4% compared to the three months endedSeptember 2018, including a 4% unfavorable

impact from foreign currency. International revenues represented 47% of netrevenues in the current period.

• Gross margin increased 90 basis points to 52.9% compared to the threemonths ended September 2018 primarily driven by a mix-shift to higher marginbusinesses.

• Earnings per share increased 56% to $1.61 from $1.04 in the 2018 period. Thethree months ended September 2019 included a $0.41 benefit from theenactment of Switzerland's Federal Act on Tax Reform and AHV Financing("Swiss Tax Act"). The increase was also driven by organic growth in theActive and Outdoor segments, and continued strength in our direct-to-consumer and international businesses. These improvements were partiallyoffset by costs related to the relocation of our global headquarters and certainbrands to Denver, Colorado, specified strategic business decisions,continued investments in our key strategic growth initiatives and theunfavorable impacts from foreign currency.


ANALYSIS OF RESULTS OF OPERATIONS

Consolidated Statements of Income

The following table presents a summary of the changes in net revenues for the three and six months ended September 2019 from the comparable periods in 2018:

(In millions) Three Months Ended

September Six Months Ended

September Net revenues — 2018 $ 3,219.4 $ 5,356.5 Organic growth 263.3 497.8 Acquisition — 11.8 Dispositions (30.6 ) (91.9 ) Impact of foreign currency (58.8 ) (109.5 ) Net revenues — 2019 $ 3,393.3 $ 5,664.7

VF reported a 5% and 6% increase in revenues for the three and six months ended September 2019, respectively, compared to the 2018 periods. The revenue increase inboth periods was attributable to organic growth in the Active and Outdoor segments and continued strength in our direct-to-consumer and international businesses. The sixmonths ended September 2019 also benefited from organic growth in the Work segment. The increases in both periods were partially offset by lower revenues due to theReef® brand and Van Moer business dispositions and an unfavorable impact from foreign currency. Excluding the impact of foreign currency, international sales grew inevery region in both the three and six months ended September 2019.

Additional details on revenues are provided in the section titled “Information by Reportable Segment.”

The following table presents the percentage relationships to net revenues for components of the Consolidated Statements of Income:

Three Months Ended September Six Months Ended September 2019 2018 2019 2018Gross margin (net revenues less cost of goods sold) 52.9 % 52.0 % 53.5 % 52.4 %Selling, general and administrative expenses 35.9 35.1 40.9 40.1Operating margin 17.1 % 16.9 % 12.6 % 12.3 %

Gross margin increased 90 and 110 basis points in the three and six months endedSeptember 2019, respectively, compared to the 2018 periods. Gross margin in boththe three and six months ended September 2019 was positively impacted by a mix-shift to higher margin businesses, partially offset by certain increases in productcosts.

Selling, general and administrative expenses as a percentage of total revenuesincreased 80 basis points during both the three and six months ended September2019, compared to the 2018 periods. The increase in both periods was primarilydue to costs related to the relocation of our global headquarters and certain brandsto Denver, Colorado and specified strategic business decisions in South America.The increase in both periods was also due to continued investments in our keystrategic growth initiatives. These costs were partially offset by leverage ofoperating expenses on higher revenues in both the three and six months endedSeptember 2019, and a gain of approximately $11 million in the six months endedSeptember 2019 on the sale of office real estate and related assets in connectionwith the relocation of VF's global headquarters and certain brands to Denver,Colorado.

Net interest expense decreased $11.0 million and $20.8 million during the three andsix months ended September 2019, respectively, compared to the 2018 periods.The decrease in net interest expense in both the three and six months endedSeptember 2019 was primarily due to lower borrowings on short-term debt, partiallydue to repayment activity funded by the cash received from Kontoor Brands, andhigher international cash balances in higher

yielding currencies. Total outstanding debt averaged $2.4 billion in in the six monthsended September 2019 and $3.6 billion in the same period in 2018, with weightedaverage interest rates of 3.9% and 3.0%, respectively.

Other income (expense), net decreased $30.2 million and $55.2 million during thethree and six months ended September 2019, respectively, compared to the 2018periods. The decrease in both periods was due to estimated losses on sale of $32.3million recorded in the three months ended September 2018, related to thedivestitures of the Reef® brand and Van Moer businesses. The decrease in the sixmonths ended September 2019 was also driven by lower pension cost in the sixmonths ended September 2019. The decrease in pension cost was due to highersettlement charges and curtailments recorded in the six months ended September2018 than in the six months ended September 2019.

The effective income tax rate for the six months ended September 2019 was (8.9)%compared to 14.0% in the 2018 period. The six months ended September 2019included a net discrete tax benefit of $177.6 million, which included a $6.9 milliontax benefit related to stock compensation, a $6.7 million net tax benefit related tounrecognized tax benefits and interest and a $164.4 million tax benefit related to theSwiss Tax Act. The $177.6 million net discrete tax benefit in the 2019 periodreduced the effective income tax rate by 25.9%. The 2018 period included a netdiscrete tax benefit of $1.9 million, which included a $17.6 million tax benefit relatedto stock compensation, a $1.0 million net tax expense related to unrecognized taxbenefits and interest, a $12.9 million net tax


expense related to adjustments to provisional amounts recorded in 2017 under theU.S. Tax Cuts and Jobs Act and a $1.6 million tax expense related to adjustmentsto previously recognized state income tax credits. The $1.9 million net discrete taxbenefit in the 2018 period reduced the effective income tax rate by 0.3%. Withoutdiscrete items, the effective income tax rate for the six months ended September2019 increased by 2.7% compared with the 2018 period primarily due to a lowerpercentage of income in lower tax rate jurisdictions.

As a result of the above, income from continuing operations in the three monthsended September 2019 was $649.0 million ($1.61 per diluted share) compared to$416.1 million ($1.04 per diluted share) in the 2018 period, and income fromcontinuing operations in the six months ended September 2019 was $746.3 million($1.86 per diluted share) compared to $477.5 million ($1.19 per diluted share) in the2018 period. Refer to additional discussion in the “Information by ReportableSegment” section below.

Information by Reportable Segment

VF's reportable segments are: Outdoor, Active and Work. We have included an Other category in the tables below for purposes of reconciliation of revenues and profit, but itis not considered a reportable segment. Included in this Other category are results related to the sale of non-VF products and transition services primarily related to the saleof the Nautica® brand business.

Refer to Note 15 to the consolidated financial statements for a summary of results of operations by segment, along with a reconciliation of segment profit to income beforeincome taxes.

The following tables present a summary of the changes in segment revenues and profit in the three and six months ended September 2019 from the comparable periods in2018:

Segment Revenues:

Three Months Ended September (In millions) Outdoor Active Work Other (a) Total Segment revenues — 2018 $ 1,466.5 $ 1,300.0 $ 451.7 $ 1.2 $ 3,219.4 Organic growth 88.7 159.2 (3.4) 18.8 263.3 Dispositions — (20.3) (10.3) — (30.6) Impact of foreign currency (29.3) (25.3) (2.4) (1.8) (58.8) Segment revenues — 2019 $ 1,525.9 $ 1,413.6 $ 435.6 $ 18.2 $ 3,393.3

Six Months Ended September (In millions) Outdoor Active Work Other (a) Total Segment revenues — 2018 $ 2,035.1 $ 2,436.9 $ 875.0 $ 9.5 $ 5,356.5 Organic growth 136.9 329.3 12.7 18.9 497.8 Acquisition 11.8 — — — 11.8 Dispositions — (68.2) (23.7) — (91.9) Impact of foreign currency (47.2) (52.2) (5.9) (4.2) (109.5) Segment revenues — 2019 $ 2,136.6 $ 2,645.8 $ 858.1 $ 24.2 $ 5,664.7

Segment Profit:

Three Months Ended September (In millions) Outdoor Active Work Other (a) Total Segment profit — 2018 $ 258.1 $ 351.1 $ 51.3 $ 0.7 $ 661.2 Organic growth 4.7 43.1 (11.4) 1.1 37.5 Dispositions — 1.3 (0.6) — 0.7 Impact of foreign currency (6.4) (7.3) (0.1) 0.6 (13.2) Segment profit — 2019 $ 256.4 $ 388.2 $ 39.2 $ 2.4 $ 686.2


Six Months Ended September (In millions) Outdoor Active Work Other (a) Total Segment profit — 2018 $ 174.6 $ 620.2 $ 100.2 $ 3.1 $ 898.1 Organic growth 6.6 97.6 (12.5) (2.8) 88.9 Acquisition (0.2) — — — (0.2) Dispositions — (7.5) (1.1) — (8.6) Impact of foreign currency (4.9) (14.5) (0.4) 0.5 (19.3) Segment profit — 2019 $ 176.1 $ 695.8 $ 86.2 $ 0.8 $ 958.9

(a) Included in the Other category for the three and six months ended September 2019 are results primarily related to the sale of non-VF products. The three and six months ended September2018 reflect results primarily from transition services related to the sale of the Nautica® brand business. Differences in the results as compared to the prior year, other than the impact offoreign currency, are reflected within the "organic growth" activity.

The following sections discuss the changes in revenues and profitability by segment. For purposes of this analysis, royalty revenues have been included in the wholesalechannel for all periods.

Outdoor

Three Months Ended September Six Months Ended September (Dollars in millions) 2019 2018

PercentChange 2019 2018

PercentChange

Segment revenues $ 1,525.9 $ 1,466.5 4.1 % $ 2,136.6 $ 2,035.1 5.0%Segment profit 256.4 258.1 (0.7)% 176.1 174.6 0.9%Operating margin 16.8% 17.6% 8.2% 8.6%

The Outdoor segment includes the following brands: The North Face®, Timberland® (excluding Timberland PRO®), Icebreaker®, Smartwool® and Altra®.

Global revenues for Outdoor increased 4% in the three months ended September2019 compared to 2018, including a 2% unfavorable impact due to foreign currency.Revenues in the Americas region increased 8%, including a 1% unfavorable impactdue to foreign currency. Revenues in the Europe region decreased 3%, including a5% unfavorable impact from foreign currency. Revenues in the Asia-Pacific regionincreased 7%, including a 2% unfavorable impact from foreign currency.

Global revenues for Outdoor increased 5% in the six months ended September2019 compared to the 2018 period, including a 2% unfavorable impact due toforeign currency. Revenues in the Americas region increased 10%. Revenues in theEurope region decreased 3%, including a 5% unfavorable impact from foreigncurrency. Revenues in the Asia-Pacific region increased 6%, including a 3%unfavorable impact from foreign currency.

Global revenues for The North Face® brand increased 8% in both the three and sixmonths ended September 2019 compared to the 2018 periods. This includes a 2%unfavorable impact from foreign currency in both the three and six months endedSeptember 2019. The increase in both periods was due to strong operationalgrowth across all channels and regions, including strong wholesale performanceand growth in the direct-to-consumer channel driven by an expanding e-commercebusiness and comparable store growth.

Global revenues for the Timberland® brand (excluding Timberland PRO®)decreased 3% and 2% in the three and six months ended September 2019,respectively, compared to the 2018 periods, as slight increases in the direct-to-consumer channel were more than

offset by an overall 3% unfavorable impact from foreign currency in both the threeand six months ended September 2019. Increases in the wholesale channel in theAmericas and the Asia-Pacific regions for both periods were more than offset bydeclines in the Europe region driven by weakness in the men's footwear category.

Global direct-to-consumer revenues for Outdoor increased 5% and 4% in the threea n d six months ended September 2019, respectively, compared to the 2018periods. This includes a 1% and a 2% unfavorable impact from foreign currency inthe three and six months ended September 2019, respectively. The increase inboth periods was primarily due to a growing e-commerce business across allregions. Global wholesale revenues increased 4% and 5% in the three and sixmonths ended September 2019, respectively, compared to the 2018 periods, drivenby global growth in The North Face® brand in both periods. The change included a2% and a 3% unfavorable impact from foreign currency in the three and six monthsended September 2019, respectively.

Operating margin decreased 80 and 40 basis points in the three and six monthsended September 2019, respectively, compared to the 2018 periods due torelocation costs, higher product costs and increased investments in direct-to-consumer, product innovation, demand creation and technology. The declines inboth periods were partially offset by leverage of operating expenses on higherrevenues and increased pricing. The decrease in the six months ended September2019 was also partially offset by a gain of approximately $11 million on the sale ofoffice real estate and related assets in connection with the relocation of VF's globalheadquarters and certain brands to Denver, Colorado during the first quarter.


Active



PercentChange

Segment revenues $ 1,413.6 $ 1,300.0 8.7% $ 2,645.8 $ 2,436.9 8.6%Segment profit 388.2 351.1 10.6% 695.8 620.2 12.2%Operating margin 27.5% 27.0% 26.3% 25.5%

The Active segment includes the following brands: Vans®, Kipling®, Napapijri®, Eastpak®, JanSport®, Reef® (through the date of sale) and Eagle Creek®.

Global revenues for Active increased 9% in the three months ended September2019, compared to the 2018 period, driven by growth across all channels andregions. The overall increase includes a 2% unfavorable impact from foreigncurrency. Revenues in the Americas region increased 10%. Revenues in theEurope region increased 3%, including a 5% unfavorable impact from foreigncurrency. Revenues in the Asia-Pacific region increased 20%, with a 3%unfavorable impact from foreign currency. The three months ended September2019 were negatively impacted by the sale of the Reef® brand business in October2018, which resulted in lower revenues of $20.3 million. Excluding the impact of thedisposition, revenues in the three months ended September 2019 increased 10%compared to the 2018 period, including a 2% unfavorable impact from foreigncurrency.

Global revenues for Active increased 9% in the six months ended September 2019,compared to the 2018 period, driven by growth across all channels and regions. Theoverall increase includes a 2% unfavorable impact from foreign currency. Revenuesin the Americas region increased 10%. Revenues in the Europe region increased1%, including a 5% unfavorable impact from foreign currency. Revenues in theAsia-Pacific region increased 20%, with a 5% unfavorable impact from foreigncurrency. The six months ended September 2019 were negatively impacted by thesale of the Reef® brand business in October 2018, which resulted in lower revenuesof $68.2 million. Excluding the impact of the disposition, revenues in the six monthsended September 2019 increased 12% compared to the 2018 period, including a2% unfavorable impact from foreign currency.

Vans® brand global revenues increased 14% and 17% in the three and six monthsended September 2019, respectively, compared to the 2018 periods. This includesa 2% unfavorable impact from

foreign currency in both the three and six months ended September 2019. Theincrease in both periods was due to strong operational growth across all channelsand regions, including strong wholesale performance and direct-to-consumergrowth driven by an expanding e-commerce business, comparable store growthand new store openings.

Global direct-to-consumer revenues for Active grew 14% and 16% in the three andsix months ended September 2019, respectively, compared to the 2018 periods,including a 1% and a 2% unfavorable impact from foreign currency in the three andsix months ended September 2019, respectively. Growth in the direct-to-consumerchannel was driven by a growing e-commerce business, comparable store growthand new store openings. Wholesale revenues increased 4% and 2% in the threeand six months ended September 2019, respectively, driven by global growth in theVans® brand in both periods, and included a 3% unfavorable impact from foreigncurrency in both the three and six months ended September 2019. Excluding theimpact of the Reef® brand disposition, wholesale revenues increased 7% in both thethree and six months ended September 2019, compared to the 2018 periods. Thisincludes a 2% and a 3% unfavorable impact from foreign currency in the three andsix months ended September 2019, respectively.

Operating margin increased 50 and 80 basis points in the three and six monthsended September 2019, respectively, compared to the 2018 periods, reflectinggross margin expansion driven by a mix-shift to higher margin businesses andproducts, and leverage of operating expenses on higher revenues in both periods.These increases were partially offset by increased investments in direct-to-consumer, product innovation and demand creation in both periods.


Work



PercentChange

Segment revenues $ 435.6 $ 451.7 (3.6)% $ 858.1 $ 875.0 (1.9)%Segment profit 39.2 51.3 (23.6)% 86.2 100.2 (14.0)%Operating margin 9.0% 11.4% 10.0% 11.5%

The Work segment includes the following brands: Dickies®, Red Kap®, Bulwark®, Timberland PRO®, VF Solutions®, Walls®, Terra®, Workrite®, Kodiak® and Horace Small®.

Global Work revenues decreased 4% in the three months ended September 2019,compared to the 2018 period. The three months ended September 2019 included a1% unfavorable impact from foreign currency. The three months ended September2019 were negatively impacted by the sale of the Van Moer business in October2018, which resulted in lower revenues of $10.3 million. Excluding the impact of thedisposition, revenues in the three months ended September 2019 decreased 1%,compared to the 2018 period. The revenue decrease was primarily due to declinesin the Dickies® brand, which was partially offset by growth in Timberland PRO® andVF Solutions®.

Global Work revenues decreased 2% in the six months ended September 2019,including a 1% unfavorable impact from foreign currency, compared to the 2018period. The six months ended September 2019 were negatively impacted by thesale of the Van Moer business in October 2018, which resulted in lower revenues of$23.7 million. Excluding the impact of the disposition, revenues in the six monthsended September 2019 increased 1%, compared to the 2018 period. The revenueincrease was due to growth in Timberland PRO® and VF Solutions®, partially offsetby declines in the Dickies® brand.

Dickies® brand global revenues decreased 4% and 2% in the three and six monthsended September 2019, respectively, compared to the 2018 periods, including a 1%and 2% unfavorable impact from foreign currency in the three and six monthsended September 2019, respectively. The decrease in both periods was due todeclines in the Americas and Europe regions, partially offset by strength in Chinaand the direct-to-consumer channel. The decline in the Americas region was due tothe timing of shipments in the U.S. wholesale channel.

Operating margin decreased 240 and 150 basis points in the three and six monthsended September 2019, respectively, compared to the 2018 periods. The decreasein both periods reflects higher product costs, lower leverage of operating expensesdue to decreased revenues and increased investments in direct-to-consumer,product innovation and demand creation. These decreases were partially offset byincreased pricing and lower transaction and deal-related costs from the acquisitionof the Williamson-Dickie business.

Reconciliation of Segment Profit to Income Before Income Taxes

There are two types of costs necessary to reconcile total segment profit, as discussed in the preceding paragraphs, to consolidated income from continuing operations beforeincome taxes. These costs are (i) corporate and other expenses, discussed below, and (ii) interest expense, net, which was discussed in the “Consolidated Statements ofIncome” section.



PercentChange

Corporate and other expenses $ 108.9 $ 148.2 (26.5)% $ 242.7 $ 291.4 (16.7)%Interest expense, net 15.8 26.8 (41.0)% 30.8 51.7 (40.3)%

Corporate and other expenses are those that have not been allocated to thesegments for internal management reporting, including (i) information systems andshared service costs, (ii) corporate headquarters costs, and (iii) certain otherincome and expenses. The decrease in both periods was driven by estimatedlosses on sale of $9.9 million and $22.4 million related to the divestitures of theReef® brand and Van Moer businesses, respectively, that were recorded in thethree months ended September 2018, that did not recur in the 2019 period. Thedecrease in both periods was also attributed to corporate overhead and other costspreviously allocated to the former Jeans segment that have been reallocated to"Corporate and other expenses" in the three

and six-month periods ended September 2018. Certain of these costs in the threeand six-month periods ended September 2019 have been offset by reimbursementsfrom Kontoor Brands related to transition services. The decrease in the six monthsended September 2019 was also attributed to lower pension cost, primarilyattributed to significantly lower curtailments and settlement charges recorded in thesix months ended September 2019 compared to the six months ended September2018. The decrease was partially offset by increased costs related to the relocationof our global headquarters and certain brands to Denver, Colorado in the three andsix months ended September 2019.


International Operations

International revenues increased 4% and 3% in the three and six months endedSeptember 2019, respectively, compared to the 2018 periods. Foreign currencynegatively impacted international revenue growth by 4% and 5% in the three and sixmonths ended September 2019, respectively. Revenues in Europe decreased 1%and 2% in the three and six months ended September 2019, respectively, includinga 5% unfavorable impact from foreign currency in both periods. In the Asia-Pacificregion, revenues increased 14% and 13% in the three and six months endedSeptember 2019, respectively, driven by growth in China. Foreign currencynegatively impacted revenues in the Asia-Pacific region by 2% and 4% in the threeand six months ended September 2019,

respectively. Revenues in the Americas (non-U.S.) region increased 11% and 9% inthe three and six months ended September 2019, respectively, partially offset by a3% unfavorable impact from foreign currencies in both periods. Excluding theimpact of dispositions, international revenues increased 5% in both the three andsix months ended September 2019, including a 4% and a 5% unfavorable impactfrom foreign currency in the three and six months ended September 2019,respectively. International revenues were 47% and 48% of total revenues in thethree-month periods ended September 2019 and 2018, respectively, and 44% and45% of total revenues in the six-month periods ended September 2019 and 2018,respectively.

Direct-to-Consumer Operations

Direct-to-consumer revenues increased 11% and 12% in the three and six monthsended September 2019, respectively, reflecting growth in all regions. Foreigncurrency negatively impacted direct-to-consumer revenue growth by 2% in both thethree and six months ended September 2019. The increase in direct-to-consumerrevenues for both periods was due to comparable store growth for locations open atleast twelve months at each reporting date, new store openings and an expandinge-commerce business, which grew 15% and 19% in the three and six monthsended September 2019, respectively. The e-commerce growth includes a

2% and a 3% unfavorable impact from foreign currency in the three and six monthsended September 2019, respectively. There were 1,413 VF-owned retail stores atSeptember 2019 compared to 1,389 at September 2018. Direct-to-consumerrevenues were 32% and 30% of total revenues in the three-month periods endedSeptember 2019 and 2018, respectively. Direct-to-consumer revenues were 35%and 33% of total revenues in the six-month periods ended September 2019 and2018, respectively.

ANALYSIS OF FINANCIAL CONDITION

Consolidated Balance SheetsThe following discussion refers to significant changes in balances at September2019 compared to March 2019:

• Increase in accounts receivable — primarily due to the seasonality of thebusiness and increased wholesale shipments.

• Increase in inventories — due to the seasonality of thebusiness.

• Increase in operating lease right-of-use assets — due to amounts recorded inconnection with the adoption of Financial Accounting Standards BoardAccounting Standards Codification Topic 842, Leases ("ASC 842").

• Increase in other assets — primarily due to an increase in deferred tax assetsdue to the enactment of certain provisions of the Swiss Tax Act.

• Decrease in short-term borrowings — due to net repayment of commercial paperborrowings primarily funded by the cash received from Kontoor Brands.

• Increase in accrued liabilities — primarily due to amounts recorded for operatinglease liabilities in connection with the adoption of ASC 842.

• Increase in operating lease liabilities — due to amounts recorded for operatinglease liabilities in connection with the adoption of ASC 842.

• Decrease in other liabilities — primarily due to the reclassification of deferredrent credits from other liabilities to operating lease right-of-use assets inconnection with the adoption of ASC 842.

The following discussion refers to significant changes in balances at September2019 compared to September 2018:

• Increase in inventories — driven by growth in thebusiness.

• Decrease in intangible assets — due to the divestiture of the Reef® brandbusiness and the impact of foreign currency fluctuations.

• Increase in operating lease right-of-use assets — due to amounts recorded inconnection with the adoption of ASC 842.

• Increase in other assets — primarily due to an increase in deferred tax assetsdue to the enactment of certain provisions of the Swiss Tax Act.

• Decrease in short-term borrowings — due to net repayment of commercial paperborrowings primarily funded by the cash received from Kontoor Brands andhigher September 2018 balances due to the timing of acquisitions.

• Decrease in accounts payable — driven by the timing of payments tovendors.

• Increase in accrued liabilities — primarily due to amounts recorded for thecurrent portion of operating lease liabilities in connection with the adoption ofASC 842.

• Increase in operating lease liabilities — due to amounts recorded for operatinglease liabilities in connection with the adoption of ASC 842.

• Decrease in other liabilities — primarily due to the reclassification of deferredrent credits from other liabilities to operating lease right-of-use assets inconnection with the adoption of ASC 842.


Liquidity and Capital ResourcesThe financial condition of VF is reflected in the following:

September March September(Dollars in millions) 2019 2019 2018Working capital $2,370.9 $1,377.3 $1,283.0Current ratio 2.0 to 1 1.6 to 1 1.4 to 1Debt to total capital 45.7% 39.3% 47.1%

The increase in the current ratio at September 2019 compared to March 2019 wasprimarily due to a net increase in current assets driven by higher accountsreceivable and inventory balances, as discussed in the "Consolidated BalanceSheets" section above. The increase in the current ratio at September 2019compared to September 2018 was primarily due to a net decrease in currentliabilities driven by lower short-term borrowings, and a net increase in currentassets driven by higher cash balances due to cash received from Kontoor Brands,as discussed in the "Cash Provided (Used) by Financing Activities" section below,and higher inventory balances, as discussed in the "Consolidated Balance Sheets"section above. Both comparisons are negatively impacted by the recording of thecurrent portion of operating lease liabilities in accrued liabilities in the September2019 period in connection with the adoption of ASC 842.

For the ratio of debt to total capital, debt is defined as short-term and long-termborrowings, in addition to operating lease liabilities, beginning in the Fiscal 2020periods. Total capital is defined as debt plus stockholders’ equity. The increase inthe debt to total capital ratio at September 2019 compared to March 2019 wasattributed to the increase in operating lease liabilities, partially offset by the

increase in stockholders' equity. The increase in stockholders' equity was driven bynet income and stock-based compensation activity, partially offset by payments ofdividends. The decrease in the debt to total capital ratio at September 2019compared to September 2018 was driven by the decrease in short-term borrowings,as discussed in the "Consolidated Balance Sheets" section above and the increasein stockholders' equity which was driven by net income and stock-basedcompensation activity, partially offset by payments of dividends and purchases oftreasury stock. The decrease was partially offset by the increase in operating leaseliabilities, as discussed in the "Consolidated Balance Sheets" section above.Excluding the operating lease liabilities, the debt to total capital ratio was 35.7% asof September 2019.

VF’s primary source of liquidity is the strong annual cash flow from operatingactivities. Cash from operations is typically lower in the first half of the calendar yearas inventory builds to support peak sales periods in the second half of the calendaryear. Cash provided by operating activities in the second half of the calendar year issubstantially higher as inventories are sold and accounts receivable are collected.Additionally, direct-to-consumer sales are highest in the fourth quarter of thecalendar year.

In summary, our cash flows from continuing operations were as follows:

Six Months Ended September (In thousands) 2019 2018Cash used by operating activities $ (378,691) $ (95,685)Cash used by investing activities (75,085 ) (204,403 )Cash provided (used) by financing activities 411,914 (197,105 )

Cash Used by Operating ActivitiesCash flow related to operating activities is dependent on net income, adjustments tonet income and changes in working capital. The increase in cash used by operatingactivities in the six months ended September 2019 compared to September 2018 isprimarily due to an increase in net cash usage for working capital, partially offset byhigher net income in the six months ended September 2019.

Cash Used by Investing ActivitiesThe decrease in cash used by investing activities in the six months endedSeptember 2019 related primarily to $320.4 million of net cash paid for acquisitionsin the six months ended September 2018 and $63.7 million from the sale of officereal estate and related assets in connection with the relocation of VF's globalheadquarters and certain brands to Denver, Colorado in the six months endedSeptember 2019, partially offset by $288.3 million of proceeds from the sale ofbusinesses, net of cash sold in the six months ended September 2018. Capitalexpenditures decreased $21.0 million compared to the 2018 period.

Cash Provided (Used) by Financing ActivitiesThe increase in cash provided by financing activities during the six months endedSeptember 2019 was primarily due to $906.1 million of cash received from KontoorBrands, net of cash transferred. This increase was partially offset by a $208.6million net decrease in short-term borrowings driven by higher net repayments ofcommercial paper borrowings during the six months ended September 2019compared to the same period in 2018, and a $79.5 million decrease in proceedsfrom the issuance of Common Stock during the six months ended September 2019.

VF did not purchase shares of its Common Stock in the open market during the sixmonths ended September 2019 under the share repurchase program authorized byVF's Board of Directors. During the six months ended September 2018, VFpurchased $0.5 million of Common Stock in open market transactions related to itsdeferred compensation plans.

As of the end of September 2019, the Company had $3.8 billion remaining for futurerepurchases under its share repurchase program. VF will continue to evaluate itsuse of capital, giving first


priority to business acquisitions and then to direct shareholder return in the form ofdividends and share repurchases.

VF relies on continued strong cash generation to finance its ongoing operations. Inaddition, VF has significant liquidity from its available cash balances and creditfacilities. VF maintains a $2.25 billion senior unsecured revolving line of credit (the“Global Credit Facility”) that expires December 2023. VF may request an unlimitednumber of one year extensions so long as each extension does not cause theremaining life of the Global Credit Facility to exceed five years, subject to statedterms and conditions. The Global Credit Facility may be used to borrow funds inboth U.S. dollar and certain non-U.S. dollar currencies, and has a $50.0 millionletter of credit sublimit. In addition, the Global Credit Facility supports VF’s U.S.commercial paper program for short-term, seasonal working capital requirementsand general corporate purposes, including share repurchases and acquisitions.Outstanding short-term balances may vary from period to period depending on thelevel of corporate requirements.

VF has a commercial paper program that allows for borrowings of up to $2.25 billionto the extent that it has borrowing capacity under the Global Credit Facility.Commercial paper borrowings and standby letters of credit issued as of September2019 were $470.0 million and $14.6 million, respectively, leaving approximately $1.8billion available for borrowing against the Global Credit Facility at September 2019.

VF has $171.9 million of international lines of credit with various banks, which areuncommitted and may be terminated at any time by either VF or the banks. Totaloutstanding balances under these arrangements were $14.3 million at September2019.

VF’s credit agency ratings allow for access to additional liquidity at competitiverates. At the end of September 2019, VF’s long-term debt ratings were ‘A’ byStandard & Poor’s Ratings Services and ‘A3’ by Moody’s Investors Service, andcommercial paper ratings by those rating agencies were ‘A-1’ and ‘Prime-2’,respectively.

None of VF’s long-term debt agreements contain acceleration of maturity clausesbased solely on changes in credit ratings. However, if there were a change incontrol of VF and, as a result of the change in control, the 2021, 2023 and 2037notes were rated below investment grade by recognized rating agencies, VF wouldbe obligated to repurchase the notes at 101% of the aggregate principal amount,plus any accrued and unpaid interest.

Management’s Discussion and Analysis in the Fiscal 2019 Form 10-K provided atable summarizing VF’s contractual obligations and commercial commitments at theend of Fiscal 2019 that would require the use of funds. As of September 2019, therehave been no material changes in the amounts disclosed in the Fiscal 2019 Form10-K, except as noted below:

• Contractual obligations and commercial commitments at the end of Fiscal2019 included approximately $349 million of inventory obligations related tothe Jeans business, which is now classified as discontinued operations.

• Inventory purchase obligations decreased by approximately $600 million atthe end of September 2019 primarily due to the timing of sourcing activities.

• In addition to operating lease liabilities recorded in VF's ConsolidatedBalance Sheet, the Company has entered into approximately $284 million ofleases that have not yet commenced, primarily related to certain distributioncenter facilities.

Management believes that VF’s cash balances and funds provided by operatingactivities, as well as its Global Credit Facility, additional borrowing capacity andaccess to capital markets, taken as a whole, provide (i) adequate liquidity to meet allof its current and long-term obligations when due, (ii) adequate liquidity to fundcapital expenditures and to maintain the planned dividend payout rate, and(iii) flexibility to meet investment opportunities, including acquisitions, that mayarise.

Recent Accounting Pronouncements

Refer to Note 2 to VF’s consolidated financial statements for information on recently issued and adopted accounting standards.

Critical Accounting Policies and Estimates

Management has chosen accounting policies it considers to be appropriate toaccurately and fairly report VF’s operating results and financial position inconformity with generally accepted accounting principles in the United States ofAmerica. Our critical accounting policies are applied in a consistent manner.Significant accounting policies are summarized in Note 1 to the consolidatedfinancial statements included in the Fiscal 2019 Form 10-K.

The application of these accounting policies requires management to makeestimates and assumptions about future events and apply judgments that affect thereported amounts of assets, liabilities, revenues, expenses, contingent assets andliabilities, and related disclosures. These estimates, assumptions and judgmentsare based on historical experience, current trends and other factors believed to bereasonable under the circumstances. Management evaluates these estimates andassumptions, and may retain outside consultants to assist in the evaluation. If actualresults ultimately differ from previous estimates, the revisions are

included in results of operations in the period in which the actual amounts becomeknown.

The accounting policies that involve the most significant estimates, assumptionsand management judgments used in preparation of the consolidated financialstatements, or are the most sensitive to change from outside factors, are discussedin Management’s Discussion and Analysis in the Fiscal 2019 Form 10-K.

Except as it relates to VF's adoption of ASC 842 as disclosed in Note 2 and Note 10to VF's consolidated financial statements, there have been no material changes inVF's accounting policies.

The following discussion provides additional detail of critical accounting estimatesduring the three months ended September 2019.


Timberland Reporting Unit and Indefinite-Lived Intangible Asset ImpairmentAnalysisDuring the three months ended September 2019, management determined that therecent downturn in the historical financial results, combined with a downwardrevision to the forecast included in VF's updated strategic growth plan, was atriggering event that required management to perform a quantitative impairmentanalysis of both the Timberland reporting unit goodwill, which includes theTimberland® brand, and the Timberland indefinite-lived trademark intangible asset,which includes both the Timberland® and Timberland PRO® brands. Based on theanalysis, management concluded both the goodwill and indefinite-lived intangibleasset were not impaired. For goodwill, the estimated fair value of the reporting unitexceeded the carrying value by 27%. The estimated fair value of the indefinite-livedtrademark intangible asset exceeded its carrying value by a significant amount. Thecarrying values of the goodwill and indefinite-lived trademark intangible asset at theAugust 24, 2019 testing date were $733.5 million and $1,010.1 million, respectively.The Timberland reporting unit is included in the Outdoor reportable segment.

The fair values of the Timberland reporting unit and indefinite-lived trademarkintangible asset were estimated using valuation techniques consistent with thosediscussed in the Critical Accounting Policies and Estimates included inManagement's Discussion and Analysis in the Fiscal 2019 Form 10-K.

Management's revenue and profitability forecasts used in the Timberland reportingunit and indefinite-lived trademark intangible asset valuations considered historicalperformance, strategic initiatives and industry trends. Assumptions used in thevaluations were similar to those that would be used by market participantsperforming independent valuations of the business.

Key assumptions developed by management and used in the quantitative analysisof the Timberland reporting unit and indefinite-lived trademark intangible assetinclude:

• Financial projections and future cash flows, including terminal growth ratesbased on the expected long-term growth rate of the brand;

• Royalty rates based on market data as well as active license agreementsof the brand; and,

• Market-based discountrates.

The valuation model used by management in the impairment testing assumesrecovery from the recent downturn in the brand's

operating results and the return to growth rates and profitability more in-line withhistorical operating trends. If the brand is unable to achieve the financial projections,an impairment could occur in the future.

Management's estimates were based on information available as of the date of ourassessment. Although management believes the estimates and assumptions usedin the impairment testing are reasonable and appropriate, it is possible that VF'sassumptions and conclusions regarding impairment of the Timberland reporting unitgoodwill or indefinite-lived trademark intangible asset could change in futureperiods. There can be no assurance the estimates and assumptions, particularlyour long-term financial projections, used in our impairment testing during the threemonths ended September 2019 will prove to be accurate predictions of the future.For example, variations in our assumptions related to brand performance andexecution of planned growth strategies, discount rates, or comparable companymarket approach inputs could impact future conclusions. A future impairmentcharge of the Timberland reporting unit goodwill or indefinite-lived trademarkintangible asset could have a material effect on VF's consolidated financial positionand results of operations.

Management performed a sensitivity analysis on the impairment model used to testthe Timberland reporting unit goodwill. In doing so, management determined thatindividual changes of a 100 basis point decrease in the compound annual growthrate for revenues, a 100 basis point decrease in the compound annual growth ratefor earnings before interest, tax, depreciation and amortization ("EBITDA"), or a 100basis point increase in the discount rate used in the discounted cash flow model didnot cause the estimated fair value of the reporting unit to decline below its carryingvalue.

The Company owns a broad, diverse portfolio of brands and businesses for whichmaterial amounts of goodwill and intangible assets have been recorded in theConsolidated Balance Sheets. Management continuously evaluates theperformance of VF's brands and businesses, as well as other relevant factors, inassessing whether potential triggering events have occurred. Although no othertriggering events for impairment testing were identified during the three or sixmonths ended September 2019, it is possible that VF's conclusions regardingimpairment or recoverability of goodwill or intangible assets could change in futureperiods. A future impairment charge of goodwill or intangible assets could have amaterial effect on VF's consolidated financial position and results of operations.

Cautionary Statement on Forward-looking Statements

From time to time, VF may make oral or written statements, including statements inthis quarterly report that constitute “forward-looking statements” within the meaningof the federal securities laws. These include statements concerning plans,objectives, projections and expectations relating to VF’s operations or economicperformance and assumptions related thereto. Forward-looking statements aremade based on management’s expectations and beliefs concerning future eventsimpacting VF and therefore involve a number of risks and uncertainties. Forward-looking statements are not guarantees, and actual results could differ materiallyfrom those expressed or implied in the forward-looking statements.

Potential risks and uncertainties that could cause the actual results of operations orfinancial condition of VF to differ materially

from those expressed or implied by forward-looking statements in this releaseinclude, but are not limited to: risks associated with the spin-off of our Jeanswearbusiness completed on May 22, 2019, including the risk that VF will not realize all ofthe expected benefits of the spin-off; the risk that the spin-off will not be tax-free forU.S. federal income tax purposes; and the risk that there will be a loss of synergiesfrom separating the businesses that could negatively impact the balance sheet,profit margins or earnings of VF. There are also risks associated with the relocationof our global headquarters and a number of brands to the metro Denver area,including the risk of significant disruption to our operations, the temporary diversionof management resources and loss of key employees who have substantialexperience and expertise in our business, the risk that we may encounter difficultiesretaining


employees who elect to transfer and attracting new talent in the Denver area toreplace our employees who are unwilling to relocate, the risk that the relocation mayinvolve significant additional costs to us and that the expected benefits of the movemay not be fully realized. Other risks include foreign currency fluctuations; the levelof consumer demand for apparel, footwear and accessories; disruption to VF’sdistribution system; the financial strength of VF's customers; fluctuations in theprice, availability and quality of raw materials and contracted products; disruptionand volatility in the global capital and credit markets; VF's response to changingfashion trends, evolving consumer preferences and changing patterns of consumerbehavior, intense competition from online retailers, manufacturing and productinnovation; increasing pressure on margins; VF's ability to implement its businessstrategy; VF's ability to grow its international and direct-to-consumer businesses;VF’s and its vendors’ ability to maintain the strength and security of informationtechnology systems; the risk that VF's facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect datasecurity breaches and data or

financial loss; VF's ability to properly collect, use, manage and secure consumerand employee data; stability of VF's manufacturing facilities and foreign suppliers;continued use by VF's suppliers of ethical business practices; VF’s ability toaccurately forecast demand for products; continuity of members of VF’smanagement; VF's ability to protect trademarks and other intellectual propertyrights; possible goodwill and other asset impairment; maintenance by VF’slicensees and distributors of the value of VF’s brands; VF's ability to execute andintegrate acquisitions; changes in tax laws and liabilities; legal, regulatory, politicaland economic risks; the risk of economic uncertainty associated with the pendingexit of the United Kingdom from the European Union ("Brexit") or any other similarreferendums that may be held; and adverse or unexpected weather conditions.More information on potential factors that could affect VF’s financial results isincluded from time to time in VF’s public reports filed with the Securities andExchange Commission, including VF’s Annual Report on Form 10-K.

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.There have been no significant changes in VF’s market risk exposures from what was disclosed in Item 7A in the Fiscal 2019 Form 10‑K.

ITEM 4 — CONTROLS AND PROCEDURES.Disclosure controls and procedures:

Under the supervision of the Chief Executive Officer and Chief Financial Officer, a Disclosure Committee comprising various members of management has evaluated theeffectiveness of the disclosure controls and procedures at VF and its subsidiaries as of the end of the period covered by this quarterly report (the “Evaluation Date”). Basedon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded as of the Evaluation Date that such controls and procedures were effective.

Changes in internal control over financial reporting:

There have been no changes during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, VF's internal control over financialreporting.


PART II — OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS.Information on VF’s legal proceedings is set forth under Part I, Item 3, “Legal Proceedings,” in the Fiscal 2019 Form 10-K. There have been no material changes to the legalproceedings from those described in the Fiscal 2019 Form 10-K.

ITEM 1A — RISK FACTORS.You should carefully consider the risk factors set forth under Part I, Item 1A, “Risk Factors,” in the Fiscal 2019 Form 10-K. There have been no material changes to the riskfactors from those disclosed in the Fiscal 2019 Form 10‑K.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. (c) Issuer purchases of equity

securities:

The following table sets forth VF's repurchases of our Common Stock during the fiscal quarter ended September 28, 2019 under the share repurchase program authorized byVF’s Board of Directors in 2017.

Second Quarter Fiscal 2020

TotalNumber of

SharesPurchased

WeightedAverage

Price Paidper Share

Total Number ofShares Purchasedas Part of Publicly

Announced Programs

Dollar Valueof Shares that MayYet be Purchased

Under the ProgramJune 30 - July 27, 2019 — $ — — $ 3,836,982,574July 28 - August 24, 2019 — — — 3,836,982,574August 25 - September 28, 2019 — — — 3,836,982,574Total — —

VF will continue to evaluate future share repurchases, considering funding required for business acquisitions, VF’s Common Stock price and levels of stock option exercises.


ITEM 6 — EXHIBITS.

31.1

Certification of Steven E. Rendle, Chairman, President and Chief Executive Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant toSection 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Scott A. Roe, Executive Vice President and Chief Financial Officer, pursuant to 15 U.S.C. Section 10A, as adopted pursuant to Section302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of Steven E. Rendle, Chairman, President and Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002

32.2

Certification of Scott A. Roe, Executive Vice President and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002

101.INS

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104

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SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.

V.F. CORPORATION (Registrant) By: /s/ Scott A. Roe Scott A. Roe

Executive Vice President and Chief Financial Officer(Principal Financial Officer)

Date: October 31, 2019 By: /s/ Bryan H. McNeill Bryan H. McNeill

Vice President, Controller and Chief Accounting Officer(Principal Accounting Officer)


Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO 15 U.S.C. SECTION 10A, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven E. Rendle, certify that:

1. I have reviewed this quarterly report on Form 10-Q of V.F. Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in whichthis report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors andthe audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financialreporting.

October 31, 2019 /s/ Steven E. Rendle Steven E. Rendle Chairman, President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO 15 U.S.C. SECTION 10A, AS ADOPTED PURSUANT TO


I, Scott A. Roe, certify that:

1. I have reviewed this quarterly report on Form 10-Q of V.F. Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, inlight of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in whichthis report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (theregistrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controlover financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors andthe audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adverselyaffect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financialreporting.

October 31, 2019 /s/ Scott A. Roe Scott A. Roe Executive Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICERPURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO


In connection with the Quarterly Report of V.F. Corporation (the “Company”) on Form 10-Q for the period ending September 28, 2019 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Steven E. Rendle, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adoptedpursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

October 31, 2019 /s/ Steven E. Rendle Steven E. Rendle Chairman, President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICERPURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO


In connection with the Quarterly Report of V.F. Corporation (the “Company”) on Form 10-Q for the period ending September 28, 2019 as filed with the Securities andExchange Commission on the date hereof (the “Report”), I, Scott A. Roe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuantto § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

October 31, 2019 /s/ Scott A. Roe Scott A. Roe Executive Vice President and Chief Financial Officer

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